The European Central Bank won't find much sign of inflation in the pay deal struck by 3.8 million metals and engineering workers in Germany this week. The deal is neither straightforward nor immediate -- the pay increase is effectively saved to be handed out as lump sums, and the package is stretched over 21 months. "For the ECB, the deal will reinforce the sense that the inflation outlook is modest, and could even raise some concern on the downside, at least in the near term." "The IG Metall deal confirms German unions' focus on protecting jobs at the expense of wage restraint," Schulz said in a report. "Low wage growth will be a significant drag on inflation, post-pandemic."

Source: Irish Independent March 31, 2021 01:09 UTC