The general rule is to increase the unemployment rate by 4 percent unless the baseline unemployment rate starts at levels below 6 percent, in which case the ultimate level of the unemployment rate reached in the severely adverse scenario is fixed at 10 percent.
In addition, last December, the Board put out a proposal for comment to introduce a systematically countercyclical mechanism in the component of the scenario that shocks house prices.7 Beyond these systematic elements, the assessment of vulnerabilities is a critical input in the development of scenarios for the stress tests each year to strengthen resilience against vulnerabilities that may be identified.