European Wage Growth (Q2 YY) 3.00% (Prev. 3.40%)

A deceleration of this kind fits the disinflation trajectory ECB officials have repeatedly flagged, since wage-setting data typically capture past inflation settlements unwinding with a lag, and the hawks on the council have historically anchored on this series when arguing against easing. The relevant transmission is through the services and domestically driven component of inflation, which the ECB has consistently treated as the last holdout when headline prints soften. In comparable deceleration phases the read-through has been to steepen the expected path of cuts at the front end rather than to reprice the terminal rate, since the level of wage growth remains above what is consistent with the target at prevailing productivity. What matters next is whether the broader wage trackers and compensation-per-employee data corroborate the slowdown, and how council speakers frame it in the run-up to the next meeting. As with past prints in this series, revisions and the country composition, particularly the German round, tend to drive the follow-up commentary.