gathered in to retreat in a remote Arctic Village, European Central Bank Policymakers last week faced some cold hard The facts: Businesses benefit from higher inflation, while workers and consumers foot the bill.
The prevailing macroeconomic narrative over the past Nine months those were sharp increases in the prices for Everything from energy to food computer Chips were ramping up costs for comp in 20th countries This makes up Euro-zone.
The European Central Bank responded by raising interest rates the most in Four decades to cool demand argue it faced the risk that higher Consumer prices will pay up wages and create an inflationary spiral.
But when you roll back in Finnish village of Inari intends give The bank’s board of directors chance To delve deeper into topics that have been touched upon only regular Meetings, a slightly different picture emerged, three sources who He attended the meeting.
Articulated data in more More than two dozen slides shown to 26 policymakers showed that company profit margins were increasing rather than contracting, as would be expected when input costs rise The sources told Reuters very sharply.
Spokesman for the European Central Bank declined to comment on this story.
“that it clear Earnings expansion played a larger role role in European inflation story in the last six “A month or so,” said Paul Donovan, chief economist at UBS Global Wealth Management. The European Central Bank has failed to justify what he is doing in Context of a more Profit-based inflation story. “
The idea that companies were raising prices in excess of costs on account of Consumers and wage earners are likely to be angry general public.
But it has its effects for Central bankers too.
feeds inflation higher Corporate margins tend to self-correct as companies eventually put the brakes on on price Rises to avoid losing market sharewhich makes taming a beast quite different from the reward-price Mass escape.
So a new Focus the inflation narrative on Margins can give the more Doves members of The board has some ammo for fight against additional rate After their resistance proved largely futile over the past year, according to economists interviewed by Reuters.
Debate is due to resume at the European Central Bank next policy interview on March 16, when bank He promised to raise interest rates for them highest level since the rise of the financial calamity in 2008.
changes in a novel
List the inflation received in The eurozone is slowly beginning to transform.
Companies expect smaller price Rise according to expectations for costs and demand becomes less clear, according to surveys published by the European Central Bank and Germany’s Ifo institute.
Some Europeans countries Like Greece has introduced measures to reduce inflation in Commodities while France and Spain are discussing the same thing steps.
“Economy of Profitability suggests we may see more of Profit pressures are coming up, European Central Bank chief economist Philip Lane told Reuters know That if they raise prices too much, they will incur a loss in market share. “
In the United States, profit margin expansion started earlier and has begun already I started to turn around, albeit slowly and unevenly.
But unlike the United States, there is no official Company margin data for Euro-zone. instead of, national accounts and earnings Reports from companies listed as proxies are used to paint a picture of inflation.
consumer goods companies in the eurozone, for reinforced example operating margins to average of 10.7% last yearand up by a quarter over 2019, before global Epidemic and war in Ukraine, Refinitiv Data shows.
It included 106 companies in The study ranged from French resort owner Pierre et Vacances to car maker Stellantis to luxury goods group Hermes and Nordic retailer Stockmann.
Likewise, profits are calculated, not labor costs and taxes for the black share of local price stress in Eurozone since 2021, according to existing European Central Bank calculations on Eurostat data.
separate letter
In fact, wages were growing exponentially more Slowly out of inflation, which means 5% drop in the standard of living for average employee in Eurozone comparison with 2021, according to European Central Bank calculations.
This is pretty much the opposite of The wage-driven inflation that characterized the 1970s, the era that became the most used point of comparison in the public Debate about proper centralization bank policy economists say.
“the public The discourse is somewhat detached from what is actually happening out Philipp Heimberger, an economist at the Vienna Institute, said: for International Economic Studies. “the main story of The stakes continue forward There’s still pay looming.price whirlpool which should make mainframe bank until more violent in raise interest rates.”
For example, wages are mentioned 14 times in European Central Bank President Christine Lagarde latest news conference while margins are not mentioned once. Her deputy, Luis de Guindos, also He warned that the ECB needs to be careful because trade unions may do so demand Excessive wage increases.
“You see very clear Not wanting to discuss profit,” Daniela Gabor, prof professor of Economics and macro finance at the university of West of England in Bristol. This shows that distributive politics of Inflation targeting is: don’t go for earnings; Do not go for capital.”
in the United States , issue of Wild margins were raised by former Federal Reserve Vice President Lyle Brainard, who He is now the chief economic advisor to President Joe Biden, Democratic Senators Elizabeth Warren and Bernie Sanders.
Even within the ECB, workers’ representatives are demanding higher Pay for middle bank Employees distanced themselves from what they described as “anti-worker bias” at the organisation.
They cited, among others, a paper by IMF researchers showing that historically, wage acceleration has not led to -price spiral.
profit in exchange for wages
Policy makers met at the European Central Bank in Finland has gone through similar data sets showing profits outpace wages thanks to savings built up During closings that are spent, however also because of comp’ power to set The sources said the prices.
With these savings now and exhausted competition Back, things might change for Policymakers at the European Central Bank who Connected for Reformulate of Inflation narrative.
In January, central Portuguese bank Governor Mario Centeno was among first to warn of risk of very clear He increases in profit margins should Brings up Europeans policy agenda.
European Central Bank board Member Fabio Panetta later said that the workers had borne the brunt of surgery in prices while, on Equilibrium, the company’s profits remained constant, or even increased in some sectors.
wage acceleration, with European Central Bank forward- The wage tracker is looking for an expectation rise of approximately 5% in 2023 for Signing contracts in the last quarter of 2022. But that won’t meet the huge drop in real wages over the past year, analysts said.
“a key The missing ingredient is bargaining power of The labor movement, which has been structurally weakened by inflationary policies of The eighties of the last century and the subsequent liberalization of labor markets”, said Matthias Vermeren, a professor of international Politician economy at the Ghent Institute for International and European studies.
during the last Inflation crisis in Seventies, approximately 70% of The economic output of the employees went, with just over 20% goes to earnings, according to Eurostat data. Now, work share standing at 56% with A third goes to profits.
Policymakers at the European Central Bank are gone over Those differences in their Finnish retreat, though their initial conclusions were dotted with Caveats, sources who He attended the meeting.
Sources said some have argued that furlough schemes during the pandemic may support income, and that the continuation of the period of High inflation may raise salary demands in a way that models developed during periods of Stable prices fail to prophesy.
And interest rate It may be for doves work Cuts out After the data showed inflation in France, Spain and Germany exceeded expectations last Month.
gathered in to retreat in a remote Arctic Village, European Central Bank Policymakers last week faced some cold hard The facts: Businesses benefit from higher inflation, while workers and consumers foot the bill.
The prevailing macroeconomic narrative over the past Nine months those were sharp increases in the prices for Everything from energy to food computer Chips were ramping up costs for comp in 20th countries This makes up Euro-zone.
The European Central Bank responded by raising interest rates the most in Four decades to cool demand argue it faced the risk that higher Consumer prices will pay up wages and create an inflationary spiral.
But when you roll back in Finnish village of Inari intends give The bank’s board of directors chance To delve deeper into topics that have been touched upon only regular Meetings, a slightly different picture emerged, three sources who He attended the meeting.
Articulated data in more More than two dozen slides shown to 26 policymakers showed that company profit margins were increasing rather than contracting, as would be expected when input costs rise The sources told Reuters very sharply.
Spokesman for the European Central Bank declined to comment on this story.
“that it clear Earnings expansion played a larger role role in European inflation story in the last six “A month or so,” said Paul Donovan, chief economist at UBS Global Wealth Management. The European Central Bank has failed to justify what he is doing in Context of a more Profit-based inflation story. “
The idea that companies were raising prices in excess of costs on account of Consumers and wage earners are likely to be angry general public.
But it has its effects for Central bankers too.
feeds inflation higher Corporate margins tend to self-correct as companies eventually put the brakes on on price Rises to avoid losing market sharewhich makes taming a beast quite different from the reward-price Mass escape.
So a new Focus the inflation narrative on Margins can give the more Doves members of The board has some ammo for fight against additional rate After their resistance proved largely futile over the past year, according to economists interviewed by Reuters.
Debate is due to resume at the European Central Bank next policy interview on March 16, when bank He promised to raise interest rates for them highest level since the rise of the financial calamity in 2008.
changes in a novel
List the inflation received in The eurozone is slowly beginning to transform.
Companies expect smaller price Rise according to expectations for costs and demand becomes less clear, according to surveys published by the European Central Bank and Germany’s Ifo institute.
Some Europeans countries Like Greece has introduced measures to reduce inflation in Commodities while France and Spain are discussing the same thing steps.
“Economy of Profitability suggests we may see more of Profit pressures are coming up, European Central Bank chief economist Philip Lane told Reuters know That if they raise prices too much, they will incur a loss in market share. “
In the United States, profit margin expansion started earlier and has begun already I started to turn around, albeit slowly and unevenly.
But unlike the United States, there is no official Company margin data for Euro-zone. instead of, national accounts and earnings Reports from companies listed as proxies are used to paint a picture of inflation.
consumer goods companies in the eurozone, for reinforced example operating margins to average of 10.7% last yearand up by a quarter over 2019, before global Epidemic and war in Ukraine, Refinitiv Data shows.
It included 106 companies in The study ranged from French resort owner Pierre et Vacances to car maker Stellantis to luxury goods group Hermes and Nordic retailer Stockmann.
Likewise, profits are calculated, not labor costs and taxes for the black share of local price stress in Eurozone since 2021, according to existing European Central Bank calculations on Eurostat data.
separate letter
In fact, wages were growing exponentially more Slowly out of inflation, which means 5% drop in the standard of living for average employee in Eurozone comparison with 2021, according to European Central Bank calculations.
This is pretty much the opposite of The wage-driven inflation that characterized the 1970s, the era that became the most used point of comparison in the public Debate about proper centralization bank policy economists say.
“the public The discourse is somewhat detached from what is actually happening out Philipp Heimberger, an economist at the Vienna Institute, said: for International Economic Studies. “the main story of The stakes continue forward There’s still pay looming.price whirlpool which should make mainframe bank until more violent in raise interest rates.”
For example, wages are mentioned 14 times in European Central Bank President Christine Lagarde latest news conference while margins are not mentioned once. Her deputy, Luis de Guindos, also He warned that the ECB needs to be careful because trade unions may do so demand Excessive wage increases.
“You see very clear Not wanting to discuss profit,” Daniela Gabor, prof professor of Economics and macro finance at the university of West of England in Bristol. This shows that distributive politics of Inflation targeting is: don’t go for earnings; Do not go for capital.”
in the United States , issue of Wild margins were raised by former Federal Reserve Vice President Lyle Brainard, who He is now the chief economic advisor to President Joe Biden, Democratic Senators Elizabeth Warren and Bernie Sanders.
Even within the ECB, workers’ representatives are demanding higher Pay for middle bank Employees distanced themselves from what they described as “anti-worker bias” at the organisation.
They cited, among others, a paper by IMF researchers showing that historically, wage acceleration has not led to -price spiral.
profit in exchange for wages
Policy makers met at the European Central Bank in Finland has gone through similar data sets showing profits outpace wages thanks to savings built up During closings that are spent, however also because of comp’ power to set The sources said the prices.
With these savings now and exhausted competition Back, things might change for Policymakers at the European Central Bank who Connected for Reformulate of Inflation narrative.
In January, central Portuguese bank Governor Mario Centeno was among first to warn of risk of very clear He increases in profit margins should Brings up Europeans policy agenda.
European Central Bank board Member Fabio Panetta later said that the workers had borne the brunt of surgery in prices while, on Equilibrium, the company’s profits remained constant, or even increased in some sectors.
wage acceleration, with European Central Bank forward- The wage tracker is looking for an expectation rise of approximately 5% in 2023 for Signing contracts in the last quarter of 2022. But that won’t meet the huge drop in real wages over the past year, analysts said.
“a key The missing ingredient is bargaining power of The labor movement, which has been structurally weakened by inflationary policies of The eighties of the last century and the subsequent liberalization of labor markets”, said Matthias Vermeren, a professor of international Politician economy at the Ghent Institute for International and European studies.
during the last Inflation crisis in Seventies, approximately 70% of The economic output of the employees went, with just over 20% goes to earnings, according to Eurostat data. Now, work share standing at 56% with A third goes to profits.
Policymakers at the European Central Bank are gone over Those differences in their Finnish retreat, though their initial conclusions were dotted with Caveats, sources who He attended the meeting.
Sources said some have argued that furlough schemes during the pandemic may support income, and that the continuation of the period of High inflation may raise salary demands in a way that models developed during periods of Stable prices fail to prophesy.
And interest rate It may be for doves work Cuts out After the data showed inflation in France, Spain and Germany exceeded expectations last Month.