Labour market: unemployment rateThe unemployment rate is close to its low point (6.3% in November) due to declines in Italy and Spain. Stronger activity in the Eurozone could lead to a further decline in the unemployment rate, especially as the job vacancy rate, despite falling below its 2019 average (2.3), remained high in 2025 (2.1 in Q3). The ECB's wage tracker also confirms that negotiated wages (excl. one-off payments) will continue to moderate until the end of H1 2026 (2.6% y/y in June 2026), before stabilising.
Inflation (y/y) and policy rateInflation remains under control. Harmonised inflation fell back below 2% in December, and Q1 2026 will, in principle, see a further decline fuelled by, among other things, moderation in goods, with inflation falling back into negative territory in January. Indeed, the decline in producer prices intensified (-1.7% y/y in November). Our scenario of the ECB key interest rate remaining unchanged in 2026 still holds, but the decrease in inflation would allow for a rate cut in the event of a negative activity shock.
