in the market. some of that is evident in australia and the asian region more generally, particularly around the provision of commodity finance. however, at least in australia ’ s case, european banks do not have a large presence, and thus far we have seen other banks step in to offset some of the withdrawal. there are also clearly still significant issues in terms of sovereign debt to be resolved. the ecb will conduct another 3 - year operation at the end of the month. there is some possibility that banks will use that operation to fund increased purchases of sovereign debt and earn the large carry on offer, which might help alleviate the sovereign pressures for a time. graph 2 showed the collapse in money multipliers that has occurred. but it is also interesting to think about the equivalent concept on the other side of the balance sheet, what might be called collateral multipliers. that is, how many times do assets get recycled in the system, particularly in terms of generating funding. collateral multipliers don ’ t appear in standard bis central bankers ’ speeches textbooks, but they are an important construct in the world of shadow banking, where repo, collateral hypothecation etc are crucial. some very interesting work has been done on this in recent times, including by manmohan singh and zoltan pozsar at the imf, along with james aitken. 1 hyun shin and others have developed a useful framework in which to think about the issue. 2 the evidence seems to be that there is a sizeable reduction in the velocity of collateral taking place. some of this is because of a change in the willingness to lend securities on the part of some asset managers, some is a function of regulatory changes. this has implications for the provision of credit, particularly from the shadow banking sector. it is an area which is certainly worth examining in more detail. returning to the topic of debt issuance, the new year has seen a thawing in bank debt markets. some of this i think can be attributed to the calendar itself. investors were reluctant to take any position towards the end of 2011, either to lock in gains already accrued or to avoid exacerbating losses in an environment of considerable uncertainty. with the beginning of the new year, the investment slate is clean and risk tolerance thus far is on the increase. this development has been bolstered by the avoidance of worst case outcomes and, as i ’ ve already mentioned, by the ecb ’ s action.

is also relevant that the prices that australian households pay for utilities are little changed and have not gone up sharply like the prices of utilities in europe. rent inflation has also been lower in australia than elsewhere. looking ahead, we expect a further lift in underlying inflation. there is also likely to be a shift in the drivers of inflation. our central forecast is that underlying inflation will increase to 3¼ per cent in the coming quarters, before easing to around 2¾ per cent. this increase in the short term primarily reflects the ongoing effects of supply - side disruptions, most recently due to omicron, at a time of strong demand. as these supply - side pressures are resolved, some of the current upward pressure on prices is expected to abate. an offset to this, though, is expected to be stronger growth in labour costs due to the tighter labour market. wages growth has picked up recently, but only to the low rate prevailing before the pandemic. the vast bulk of australians are still experiencing wages increase of no more than 2 point something per cent, although there are areas where the increases are much larger than this and non - wage benefits are also increasing. a further pick - up in overall wages growth is expected, although this is likely to be a gradual process given the institutional features of our labour market – including multi - year enterprise agreements, an annual review of award wages and publicsector wages policies. we are also expecting broader measures of labour costs to pick up faster than the wage price index. there is, however, more than the usual degree of uncertainty around the outlook for inflation and wages. it is still unclear as to whether, and at what pace, the demand for goods will normalise as infection rates decline. the speed at which the supply side of the economy can respond to changes in the demand side is also uncertain. and we have no contemporary experience to assess how wage outcomes will evolve at a national unemployment rate below 4 per cent. a broader uncertainty is the extent to which other central banks will have to increase interest rates to return inflation to lower rates. central banks and financial markets expect that a decline in inflation to target can be achieved without real policy interest rates returning to positive territory. it is entirely possible, though, that countries with higher inflation rates will need a bigger adjustment in interest rates than currently anticipated. if so, this could result in an abrupt adjustment in financial conditions. 2 / 4 bis central bankers'speeches monetary policy i would now like to turn to australian