contrast, in germany, for example, the most common fixing period is 10 years. this affects housing loans through two channels. normally, short - term rates fluctuate more than long - term rates over a business cycle. in the chart, we see interest rates on 2 / 5 bis - central bankers'speeches new housing loans. when we hiked the ecb policy rate by 450 basis points to address the sharply rising inflation in 2022 - 2023, the rates on new housing loans increased by 2. 7 percentage points on average in the euro area, whereas in finland, they went up by 3. 7 percentage points, one percentage point more. thus, monetary policy tightening had a larger impact on finnish housing loans. moreover, the effect is even more pronounced when considering the rate on the outstanding stock of loans. the right - hand side chart illustrates this clearly. while the rate on the stock of housing loans increased by about 3. 3 percentage points in finland during this rate cycle, it rose by only 90 basis points on average in the euro area. this means the pass - through of rate hikes to the stock of loans was almost four times stronger in finland. it is worth noting that for the first 20 years in the euro area, finnish households enjoyed the lowest mortgage rates in the region. this was partly due to the soundness of the finnish banking sector throughout the crisis, underscoring the importance of a stable and resilient financial sector. while i just pointed out the role of differences in interest rate fixings, it is important to note that differences in the economic structure are probably more significant factors in the varying transmission of monetary policy across euro area countries. for instance, construction and manufacturing constitute a considerable larger share of the finnish economy compared to the euro area average. it is well known that monetary policy tightening impacts construction and manufacturing more quickly and strongly than services. hence, finland is especially prone to changes in monetary policy. on one hand, this increases the effectiveness of monetary policy, but on the other hand, if the pass - through in your country differs significantly from the euro area average, the single policy may temporarily seem suboptimal. energy prices in the euro area and finland let me quickly go through some other substantial factors behind the inflation differentials we've seen between finland and the rest of the euro area. the recent inflation spike was largely driven by the cost of energy. energy prices almost tripled in the euro area on average compared to pre - pan

weigh on productivity, which further increase unit labor costs. 3. the high - inflation period ( 2021 – present ) : the post - pandemic recovery brought a sharp return of inflation, driven by global supply chain disruptions, shifts in demand, and energy price surges following russia's brutal invasion of ukraine. while euro area inflation has averaged 5. 3 % in this period, finland's inflation has been slightly lower at 4. 1 %. key contributors to this divergence include finland's milder energy price increases and smaller labor cost pressures. inflation drivers in the euro area and finland the overall picture during covid and the subsequent inflation spike was quite similar for finland and the entire euro area. initially, inflation declined due to falling energy and service prices, driven by reduced demand and lockdowns. however, as global supply chains were disrupted, some prices began to rise. the shift in demand from services to goods and then back to services also had a noticeable impact on inflation. a mix of supply and demand effects interacted, causing inflation to exceed the target for the first time in over a decade. additionally, energy and other raw material prices surged sharply due to russia's brutal invasion of ukraine, which also led to rising food prices. on the demand side, prices were pushed up by increased consumption, fueled by household savings accumulated during the lockdowns and the strong fiscal and monetary stimulus measures implemented in response to the pandemic. recently, persistent service inflation has been the main factor sustaining inflation. now, lower increases in labor costs and differences in the energy mix are the two main reasons for the finnish inflation deviating from the common trend. let me next dive a bit deeper into the drivers of these inflation differences. mortgage rates in finland vs. euro area i am an old - school central banker. to me, inflation is always and everywhere a monetary phenomenon. therefore, when analyzing inflation dynamics, one should not overlook the role of monetary policy. as finland is part of the euro area, we share the same single monetary policy with the rest of the euro area. however, even though we share the risk - free rate, the transmission of monetary policy can vary from one country to another, impacting monetary conditions in each jurisdiction. one significant difference between finland and many other euro area member states lies in the housing market. in finland, almost all housing loans are floating - rate mortgages, typically using the 12 - month euribor as a reference rate. in