Looking ahead, bank holding companies will continue to face challenging market conditions and persistent pressure on earnings. More asset write-downs are likely as the market continues to adjust risk premiums and valuations change. Adverse trends in loan quality will almost certainly continue and will require close monitoring by banking institutions and supervisory agencies alike.
Since July, inflation has breached the upper limit of the variability interval around the permanent 3 percent target. Pressures explaining this trend arise from both the core and noncore components of the National Consumer Price Index. They are expected to continue to influence price behavior during the rest of the year.