The recent correction in equity markets was accompanied by a surge in implied volatility. The increase in implied volatility on longterm German government bonds over the same period was modest, and it remains well below its average level over the past ten years. Finally, normalisation of monetary policy could be complicated by continued subdued inflation.
Recent higher inflation in the euro area seems to be mainly driven by energy prices, while core inflation remains low. The possible flattening of the Phillips curve has received a lot of attention lately. In Denmark, nominal wage growth has remained modest, despite capacity pressures and increasing labour shortages in some sectors.