Nonetheless, the uncertainty about the exact magnitude and distribution of these losses remains and is a major cause of the persistent liquidity squeeze. Therefore less benign scenarios cannot be ruled out altogether and the financial turmoil might affect bank lending conditions for households and non-financial corporations, through higher costs of financing or more restrictive credit standards, as well as corporate bond spreads.
Given the large share of labor costs in the production costs of most firms, subdued unit labor costs should be an important restraining influence on inflation.