The immediate effect was a scramble for liquidity in the main international financial centres, and by the large international banks. There was a massive rise in risk aversion in financial markets, reflected in a variety of indicators, including a rise in risk premiums – the margin that financial intermediaries demand for holding riskier assets – and steep falls in global stock markets.
With regard to price developments, euro area annual HICP inflation was 2.5% in July 2011, following 2.7% in June. The relatively high inflation rates seen over the past few months largely reflect higher energy and other commodity prices. Looking ahead, inflation rates are likely to stay clearly above 2% over the coming months.