April 10, 2012 / 1:05 AM / 8 years ago

BoE's Posen sees euro zone jobless rate staying high

WILLIAMSTOWN, Mass, April 9 (Reuters) - Recent decisive monetary policy action by the European Central Bank will not prevent unemployment in the euro zone from remaining high over the next two years, with Germany the exception, Bank of England policymaker Adam Posen said on Monday.

“Into mid 2014, at best, you’re seeing employment plateau” in most of the euro zone, Posen said during a panel on the European financial crisis at Williams College in Williamstown, Massachusetts.

In Germany, by contrast, the jobless rate is likely to fall below 5 percent. The country’s jobless rate in March was 6.7 percent, seasonally adjusted, which marked a two-decade low.

“The German natural rate of unemployment is around 5 percent and is forecast to be below that by mid-2014, so you should start to get some inflation,” Posen said. “That will make things a bit difficult for the European Central Bank.”

Wages in Germany could also rise more quickly in the next couple of years, he added.

Posen steered clear of talking about the British labor market and economy in his prepared remarks, which focused on what reforms Europe could undertake to strengthen its fiscal union.

Posen said he did not foresee a breakup of the euro zone. “I’m not even imagining it,” he said.

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