The German wage puzzle

The eurozone’s recovery has been powered in part by monetary stimulus in the form of quantitative easing (QE), which the ECB has continued despite comparatively fast growth in 2017. In March 2018, the inflation rate picked up to 1.4 per cent, which prompted demands that the ECB start to withdraw its stimulus. Unemployment across the eurozone is falling fairly rapidly. But the ECB should ignore the temptation to reduce its bond-buying programme for now: wage growth is subdued despite falling unemployment – and Germany appears to be the culprit.

ESO: Background information: ECB policies [EPRS: What Think Tanks are thinking, April 2017] http://www.europeansources.info/record/ecb-policies-what-think-tanks-are-thinking/

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