(Bloomberg) -- The jump in a key gauge of euro-zone pay doesn’t derail the ongoing retreat in inflation and won’t stop the European Central Bank from lowering interest rates in June, Governing Council member Madis Muller said.

In an interview Friday in Reykjavik, Iceland, Muller highlighted that this week’s first-quarter data on negotiated wages included some one-off payments that produced the “somewhat higher” number.

“I’m not too worried in the sense that I don’t think the trend toward lower inflation has necessarily been broken,” he said. “But it emphasizes the need to monitor developments and I think it also shows that we can’t expect inflation and other key variables as wage growth and measures of underlying inflation to decline in a linear fashion.”

With policymakers on the brink of cutting borrowing costs, the focus is on what happens after their widely telegraphed initial move next month. While France’s Francois Villeroy de Galhau downplayed the wage numbers, they contributed to a rethink among investors on the amount of monetary easing that’s likely for the rest of 2024.

Markets are now fully pricing two quarter-point steps, down from three. As inflation nears the 2% goal, ECB officials insist they’ll be guided by incoming data. Muller, similarly, wouldn’t be drawn on the outlook.

“I’d leave it up to the market to speculate on where rates will be at the end of the year,” he said. “If developments continue to be more or less in line with expectations and inflation continues to move closer to target, then we need to acknowledge that there’s room for some further accommodation by the end of the year.”

He did, though, stress the potential for “upside surprises in inflation” and said decisions shouldn’t be rushed. That’s a sentiment shared by Bundesbank President Joachim Nagel and his German colleague on the ECB’s Executive Board, Isabel Schnabel.

Nagel sees a growing likelihood of a June cut but said Friday in Stresa, Italy, that “it’s important to me that this decision is made in such a way that no autopilot can be derived from it.”

Investors also have an eye on the stronger-than-expected economic recovery in the 20-nation bloc. A survey of purchasing managers released this week suggested the fledgling rebound, following a mild recession in the second half of 2023, is taking hold, with private-sector activity topping forecasts.

“We were expecting the euro area to pick up steam gradually and this is what we are seeing,” Muller said. “So I don’t see an acceleration in the economy to the extent that it would put in doubt the downward trend in inflation.”

--With assistance from Alexander Weber and Kamil Kowalcze.

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