The volume of non-public bonds in Germany is only about a sixth of the corresponding figure in the USA, but it is more than twice as much as in any other European country. A speciality of the German capital markets are the mortgage-backed bonds and municipal bonds known as “Pfandbriefe”. Both are a kind of asset-backed-security.
We had expected that inflation would average around 2 ½ per cent in the third and fourth quarters, rising toward the upper end of our target range because of temporary factors such as gasoline prices, rather than pressure from excess demand.6 Since much of the July surprise was due to a jump in the airfare component of the consumer price index (CPI), we continue to hold this view.