Wages should be rising

Daily update

The ECB releases a negotiated wage settlement index. ECB President Lagarde has repeatedly highlighted wages as a factor determining policy moves. Real wages should be rising—after so long a period of weak wage growth, rebalancing is needed. Rising real wages should not be seen as an automatic cost pressure for inflation—changing working habits and automation have increased productivity, allowing companies to pay workers more in exchange for more output.
While not an issue with negotiated wages, there is confusion about what counts as wages. With increasing self-employment, some workers may chose to pay themselves a low wage and take more of their income in the form of dividends on self-employed profits. That confuses discussion about wage and profit shares of an economy.
Bank of England Governor Bailey faces questions from members of parliament. The questions are not likely to be insightful (expect lots of talk about “recession”). Markets will focus on the timing of the first rate cut of this cycle—although unlike other central bank heads, the Bank of England Governor can be outvoted on policy.
China cut a key lending rate more than expected, apparently with a view to boosting the property market. However, being in deflation, its real interest rate moves are less impressive.