the general collateral ( gc ) pooling repo curve as well as yields on euro area treasury bills and notes have further adjusted. woodford, m., 2001, “ monetary policy in the information economy ”, paper presented at the federal reserve bank of kansas city economic symposium at jackson hole ( 30 august – 1 september ). for a review of the impact of non - standard monetary policy on money market functioning, see monnet, c. and m. bech, 2013, “ the impact of unconventional monetary policy on the overnight interbank market ”, reserve bank of australia 2013 annual conference volume on “ liquidity and funding markets ”. bis central bankers ’ speeches the eonia has regularly been set in negative territory since 28 august together with stable trading volumes ( the average daily eonia volume from january to june 2014 was € 26. 1 billion and was € 28. 9 billion since june ) ( slide 5 ) and homogenous transmission to closely substitutable market segments, such as gc pooling repo, are evidence that a large fraction of unsecured money market transactions can take place at negative rates without hampering market functioning. this reflects an effective and well - coordinated preparation of market participants since the ecb first mentioned the possibility of bringing the dfr below zero. the fact that money market trading volumes did not fall ( they actually rose ) is remarkable given the fears some observers had expressed, informed by the japanese experience of the 1990s, on the potential impact on market functioning of a negative dfr and of very low policy rates more generally. will the transmission of lower short - term rates to a lower cost of credit for the real economy be as smooth? while bank lending rates have come down in the past in line with lower policy rates, there is a limit to how cheap bank lending can be. the mark - up that banks add to the cost of obtaining funding from the central bank compensates for credit risk, term premia and the cost of originating, screening and monitoring loans. the need for such compensation does not necessarily fall when policy rates are lowered. if anything, a central bank lowers rates when the economy needs stimulus, which is precisely when it is difficult for banks to find good loan making opportunities. it remains to be seen whether and to what extent the recent monetary policy accommodation translates into cheaper bank lending. 11 another concern with lowering rates is that it may contribute to the instability of the financial sector. while this can be a valid concern, in

new geopolitical environment, productivity losses for european firms turn out to be partly structural. given the delays with which these data become available, we cannot wait until we have all the relevant information. to do so could risk being too late in adjusting policy. but in the coming months, we expect to have two important pieces of evidence that could raise our confidence level sufficiently for a first policy move. first, we will have more data to confirm whether wages are indeed growing in a way that is compatible with inflation reaching our target sustainably by mid - 2025. the latest data point in this direction. growth in compensation per employee edged down to 4. 6 % in the fourth quarter of last year – slightly below our march projection – 4 / 6 bis - central bankers'speeches from 5. 1 % in the third quarter. negotiated wage growth, which accounts for the lion's share of compensation per employee growth, also decreased from 4. 7 % to 4. 5 % in the fourth quarter. similarly, the ecb's forward - looking wage tracker, which anticipates the development of negotiated wage growth in the euro area, is showing early signs that pressure is easing. average wage growth in 2024 for all existing wage contracts9 fell from 4. 4 % at the time of our january governing council meeting to 4. 2 % at the time of our meeting in march. the coming months will help us form an even clearer picture. we will receive data on negotiated wage growth in the first quarter of this year at the end of may. and many wage negotiations are currently taking place in large sectors, the outcome of which will be entered into our wage tracker as soon as the negotiations are concluded. employees whose contracts ran out last year and have not been renewed, or will run out by march 2024, account for around one - third of those in our wage tracker. second, by june we will have a new set of projections that will confirm whether the inflation path we foresaw in our march forecast remains valid. these projections will also implicitly give us more insight into the path of underlying inflation. we will have more visibility on the strength of the recovery and the likely direction of the labour market, and therefore on the consequences for wages, profits and productivity. in addition, we will have had a longer window to assess whether inflation data continue to fall broadly in line with our projections. if they do, we can be more confident that our models are now better accurately capturing inflation