ECB’s Philip Lane warns shrinking profit margins key to achieving lower inflation

Businesses will be able to partly absorb rising labour costs due to their level of profitability

Philip Lane, the ECB President, said firms’ profitability would help them absorb some of their workers higher wager demands. Picture: Fergal Phillips

Philip Lane, the chief economist at the European Central Bank, said corporate profitability, as well as rising wages, will help shape the path for consumer prices this year.

“We think firms will absorb some of these increased labour costs and they can afford it due to the level of profits,” Lane said Thursday in Rome. “So that’s how you can have higher wages but inflation not growing as fast.”

“It’s all based on companies’ profit ...