However, apart from these unfavourable shocks, some structural inefficiencies have also been holding back the euro area economy. Forecasting the future is notoriously difficult - even more so under the current geopolitical conditions. Heightened volatility in oil markets, for instance, makes it more problematic than usual to assess shortterm inflation developments.
And it is why we have been explicit since the onset of the pandemic that capital buffers are there to be used, to absorb losses and maintain the supply of lending in a sustainable way to households and businesses.