Magnifying the disinflationary effect are the dynamics working from the initial effect on inflation to expected inflation and back to inflation - in effect, the virtuous wage-price cycle that is initiated by the direct disinflationary effect. One final step is required to estimate the effect of the q - q* term on the short-run NAIRU.
In addition, external financing conditions remain favourable. Moreover, firms’ underlying sentiment is also very optimistic, which means that not just the recent hard data, but also soft indicators and the “psychological factor” signal stronger future capital formation. Third: The marked ongoing improvement in the labour market situation should support the strengthening of private consumption.