32. Losses on account of sub-prime mortgage markets were limited on the balance sheets of banks and financial institutions and have been written off. In the financial sector, the steepest decline was registered in the securities markets that were fast to recover with the Fed and ECB policy stance, however, the markets remained volatile with corrections in valuations already factored in. 33.
Intertwined with financial market turmoil is risk aversion to financially innovative products, and investors’ move to global commodities whose demand pressures broke all historical price behavior patterns and reached new levels. This price spiral of strategic commodities such as oil, wheat and other products has created dilemmas as pass-through mechanisms are augmenting inflationary pressures, while not passing through this is complicating macroeconomic management. 34.