of unemployment, wages growth appears to have been lower than would have been expected based on historical relationships. in fact, at an economy - wide level, unit labour costs – that is, wages per unit of aggregate output – have not risen for four years. this has surely helped employment. this same phenomenon is also important in understanding the behaviour of inflation, which has been quite low. as measured by the consumer price index, inflation was 1. 7 per cent over 2015. this was affected by falling prices for petrol and utilities, the latter in part due to government policy decisions. but even the underlying measures, which remove or down - weight such effects, at around 2 per cent, are low. price rises for non - tradeable items bis central bankers ’ speeches are at their lowest for many years, and this reflects, among other things, the modest growth of labour costs. in summary then, the economy is continuing to grow at a modest pace, in the face of considerable adjustment challenges. it has apparently been generating more employment growth and lower unemployment than we expected, while inflation has remained quite low. turning then to the rest of the world, there have been some key developments since we last met with the committee. in december, the united states federal reserve raised its policy interest rate for the first time in 9½ years. the last time the fed actually started an upward phase in rates was as far back as 2004. the fed ’ s rationale for this change was that the us economy had sufficient strength that a zero interest rate was no longer needed – and, as such, it is a welcome development. the change had been very well telegraphed and was absorbed by financial markets without any immediate disruption. that said, us dollar funding costs are important to many financial strategies around the world and when they start to increase, however gradually, investors adjust their positions. this had already been happening in anticipation of the fed ’ s decision, with funds seeking to lessen their exposures to emerging markets, high - yield debt instruments and so on. these adjustments continued subsequent to the fed announcement. for some emerging market economies, facing lower commodity export prices, things have become more challenging. at the same time, some other major jurisdictions have sought to ease their monetary policies further. both the european central bank and the bank of japan have pushed rates on some deposits at the central bank below zero. in other words, policy trajectories among the major jurisdictions are diverging, which creates the potential for market movements

in conditions of a pandemic, there is an increasing propensity of households to invest in real estate. actually, in conditions of low interest rates, relatively stable disposable income, reduced possibilities and needs for consumption, change in the models of work, globally there is an increase in the demand for real estate and in the real estate prices. unlike most economic indicators, which collapsed during the pandemic, real estate prices are increasing. in the eu countries, in the first half of this year, real estate prices registered an average growth of nearly 7 %, compared with the growth of around 4 % in the past few years. in our country, the price growth is more moderate of about 4. 4 % during this year, but with signs of acceleration. in the entire region and in our country, housing lending is accelerating and the growth rates are more dynamic compared to the growth of consumer loans. it appears that currently in our country the real estate market developments are in accordance with the shifts in the supply and demand, and the price pressure exists, but it is not that pronounced, as it is in the european union countries. however, this " pandemic syndrome " should be carefully monitored, given that the exposure of the banking system to the real estate market is increasing more and more. hence, there is a need for enhanced monitoring also of this part of the portfolio and keeping of the banks'capacity to deal with the possible future shocks. 2 / 3 bis - central bankers'speeches the banking systems in both the region and in our country are passing the test imposed by the pandemic crisis well, and the challenge for maintaining the capacity for credit support and also maintaining stability will remain in the next period. the indicators of solvency, liquidity, profitability of banks and the quality of the credit portfolio remain stable, and some of them further improved. but, the crisis is getting a prolonged dimension and may have lasting consequences and impose a need for restructuring in some of the sectors of the economy. at the moment, the disruption of the global value chains globally and the growth of costs are creating interruptions in certain industries and are one of the major risks to the expected economic recovery. hence, timely monitoring of all risks and their timely identification is a current priority, in order to reduce the burden on the banks'balance sheets. according to the latest eib survey, some of the banks in the wider cesee region expect a certain increase in nonperforming