Labour markets in all the major advanced economies have been tightening for several years, and in many cases they are now close to full employment. At face value this suggests that the world may be on the verge of a broad-based pickup in wage inflation. However, we expect average earnings growth to rise significantly only in the US and, to a lesser extent, the UK. This is a key reason for our forecast that the Fed will raise rates faster than most anticipate, including by 25bp in June, while most other central banks either leave policy unchanged or, in the euro-zone and Japan for example, loosen policy further.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services