Energy prices have gone up—why is the central bank still watching wages?
On October 8, European Central Bank Governing Council member Dolenc told Reuters that there is a difference: the indirect impact of energy on corporate and service prices has already appeared, but there is not yet any sign of a second-round effect through wages.
These two steps should not be mixed together. When energy gets more expensive, companies’ bills rise first; if wages then keep chasing higher, and firms pass labor costs back into prices, the pressure can evolve from a one-time shock into a harder-to-fade cycle. Not seeing the second round for now does not mean it won’t happen later.
He also pointed out that the labor market is no longer as tight as it was three or four years ago. That condition affects employees’ bargaining power, firms’ ability to absorb costs, and how long price increases can last. When judging policy, focusing only on one oil-price curve can easily miss the second half of the story.
My sequence for observation is energy, corporate pricing, then wages and services inflation. If the latter two follow, markets may reassess how long high rates need to stay in place; if the pass-through is limited, you cannot simply apply the past rate-hike path.
In the crypto world, $BTC , $ETH , and $SOL are facing changes in financing conditions and risk appetite. A statement from a European official cannot directly replace a global liquidity judgment, and it is certainly not the answer to whether any coin rises or falls that night.
Click my profile picture to view live trade signals
On October 8, European Central Bank Governing Council member Dolenc told Reuters that there is a difference: the indirect impact of energy on corporate and service prices has already appeared, but there is not yet any sign of a second-round effect through wages.
These two steps should not be mixed together. When energy gets more expensive, companies’ bills rise first; if wages then keep chasing higher, and firms pass labor costs back into prices, the pressure can evolve from a one-time shock into a harder-to-fade cycle. Not seeing the second round for now does not mean it won’t happen later.
He also pointed out that the labor market is no longer as tight as it was three or four years ago. That condition affects employees’ bargaining power, firms’ ability to absorb costs, and how long price increases can last. When judging policy, focusing only on one oil-price curve can easily miss the second half of the story.
My sequence for observation is energy, corporate pricing, then wages and services inflation. If the latter two follow, markets may reassess how long high rates need to stay in place; if the pass-through is limited, you cannot simply apply the past rate-hike path.
In the crypto world, $BTC , $ETH , and $SOL are facing changes in financing conditions and risk appetite. A statement from a European official cannot directly replace a global liquidity judgment, and it is certainly not the answer to whether any coin rises or falls that night.
Click my profile picture to view live trade signals