Additionally, some savings products can be difficult for insurers to market when only returns of near 0 percent can be profitably guaranteed. And the COVID event has posed some challenges for supervisors. Social distancing has changed how financial products are distributed, how we supervise financial institutions, and how we collaborate in the regulatory community.
This is because if these shocks do not flow through to a persistent change in growth of labour costs, inflation should return to a lower rate once the effect of the shock passes. But if supply-side shocks do lead to a persistent shift in labour cost growth, inflation will not return to where it was before.