Labour markets across Central Europe and the Baltics are tightening. Last month unemployment hit record lows in the Czech Republic and Latvia and wage growth accelerated to fresh highs in Poland. Meanwhile, wages grew faster than productivity in Slovakian industry for the first time in eighteen months. While tighter labour markets have yet to create any immediate inflation concerns, mediumterm price pressures are building and interest rates could be hiked in Poland and the Czech Republic in response. By contrast, strong wage growth is preventing interest rates from being cut in Hungary.
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