Eurozone Wage Growth Jumps to 3.95%, Complicating ECB Rate Outlook

Negotiated wages in the euro area rose 3.95% year-on-year in the second quarter, up sharply from 2.5% in the first three months of 2025 and above the European Central Bank’s wage-tracker projection of 3.4%. The pickup reverses the brief moderation seen earlier in the year and underscores continued pressure on labor costs across the currency bloc. The rebound in wage growth is likely to reinforce caution at the ECB, which has already signaled a pause in policy easing for the summer as it assesses whether inflationary pressures are subsiding fast enough to warrant further rate cuts. Persistently strong pay increases risk feeding into consumer prices, complicating the central bank’s effort to return inflation to its 2% target.