Euro zone’s low productivity may slow inflation’s fall – ECB’s Schnabel

FRANKFURT, Feb 16 (Reuters) – Europe’s sluggish productivity growth may slow the fall in inflation to the European Central Bank’s 2% target, ECB policymaker Isabel Schnabel said on Friday.

“Persistently low, and recently even negative, productivity growth exacerbates the effects that the current strong growth in nominal wages has on unit labour costs for firms,” she told an event in Florence, Italy. “This increases the risk that firms may pass higher wage costs on to consumers, which could delay inflation returning to our 2% target.”