After all, they gather funds and invest these in bonds and other credit instruments, including the associated derivatives. Consequently, as the distinction between hybrid private equity funds and hedge funds is blurred and the former partly operate under the umbrella of hedge funds, they too belong to the shadow banking system.
The unemployment rate in the euro area has dropped to a historically low rate; the shortage of skilled labour is growing. This could strengthen wage dynamics. Second-round effects may, however, also arise from the current wave of price increases driving up inflation expectations. The longer the high inflation rates persist, the more strongly these expectations will be driven up.