So far this year, owners’ equivalent rent has risen at an annual rate of 3 percent, returning to a more typical relationship with interest rates and contributing to the pickup in core inflation.
Taking into account the write-downs on banks’ securities reported by late May 2009 and the banks’ loan loss provisions for 2007 and 2008, the potential future losses of euro area banks, largely concentrated on their loan exposures, could be around USD 283 billion until the end of 2010. These potential losses would be cushioned by provisions and retained earnings over the next two years.