Although there seem to be requests for sizeable wage increases in a number of countries, in order to recover most of the losses in purchasing power caused by the energy shock, there are currently no signs of a price-wage spiral being triggered in the euro area as a whole, which would increase the persistence of inflationary pressures and broaden the scope of the monetary policy response.
Here again, the changes we are seeing from the originate-to-distribute models can come to our aid in structuring our thinking. In the case of banking institutions, this could entail an assessment of where pressure points might arise under the new business models if risk appetites were to reverse and liquidity conditions to deteriorate.