a year or with an interest rate fixation period of up to one year declined from 70 % to 59 %. 18 a second factor could be related to a slower pass - through of market rates to retail deposit rates than in previous episodes, which could weaken the standard intertemporal channel through which rising interest rates discourage savers from spending. 19 this slower pass - through could come from the fact that, during the period with negative rates, the these results, however, mask a significant degree of heterogeneity across countries : the share of household debt with interest rates that reset within a year stands at 63 % in spain and 59 % in italy, but just 6 % in france and germany. in the case of firms, the share of bank debt either maturing or with interest rates that reset within a year stands at 93 % in italy, 70 % in spain, 48 % in france and 41 % in germany. it should be noted, however, that a slower pass - through to deposit rates may also have dampening effects on household spending, by slowing down the increase in savers ’ financial income. remuneration of retail deposits was above market interest rates, as banks were unwilling to reduce it below zero. additionally, the current ample liquidity available to commercial banks reduces the pressure on them to increase the remuneration of retail deposits. other factors point to a potentially faster monetary policy transmission compared to past episodes. first, the current hiking cycle comes after the strong negative shock prompted by the pandemic, which adversely impacted firms ’ financial situation by increasing their debt levels. this leaves them more vulnerable to interest rate hikes, and their expenditure decisions may be more sensitive to monetary policy changes. conversely, however, households still have around €900 billion in excess savings built up during the pandemic and they are benefiting from sizeable fiscal policy support. second, there has been a shift from bank to bond funding over the last decade, with bond debt increasing from 16 % to 24 % of non - financial corporations ’ total debt. 20 this, together with the faster monetary policy pass - through to bond rates than to bank rates, implies faster transmission than in the past. third, the residential real estate market is a key area to monitor, in particular given that some euro area countries have experienced a significant increase in house prices over the last decade, with signs of overvaluation. 21 housing represents a major part of household wealth and bank assets. thus,

increase the likelihood of the feared de - anchoring of inflation expectations. on the information available, there is no evidence of such effects occurring at present, at least on a widespread basis. wage settlements in the euro area have gathered pace since the end of last year, with increases reaching 2. 5 % according to the latest data. although they are expected to rise further in 2023, the increases currently projected would, in principle, be compatible with the 2 % inflation target once trend productivity growth is taken into account. broadly speaking, profit margins have also remained moderate, although unevenly across sectors. however, the longer the current high inflation persists, the greater the probability of these second - round effects occurring. naturally, the extent of the economic downturn, over which, as i indicated earlier, there is significant uncertainty, and its effects on wages and profit margins, will be key determinants of the medium - term inflation outlook and, therefore, of our monetary policy decisions. ultimately, our next decisions will be based on the incoming data and their implications for achieving our medium - term inflation target, in line with the “ meeting - to - meeting ” approach that we have adopted. in any event, interest rates will have to reach a level that allows us to ensure a gradual convergence of inflation to our medium - term target, and how quickly we reach that level will be conditioned by that same target. on the financial markets, the process of monetary policy normalisation has translated into a significant increase in market interest rates. specifically, since early 2022 the 12 - month euribor has climbed by more than 250 bp to 2. 26 %, while the 10 - year overnight index swap ( ois ) rate ( typically used as the risk - free benchmark interest rate ) has risen by 210 bp. these increases have also been gradually passing through to the cost of bank funding for firms and households. this tightening of financial conditions will help to contain inflationary pressures. in an adverse scenario such as the present one, other economic policies also have a central role to play, in the shape of an incomes agreement, selective support for the most vulnerable, resolute supply - side policies, a firm commitment to fiscal sustainability and reinforcement of the european project against the current inflationary backdrop, profit margins and wages are key to avoiding a feedback loop that results in an inflationary spiral. this is precisely the overriding objective of the incomes agreement that we at the banco de espana have been advocating in recent