It should be noted, however, that these figures do not incorporate possible effects of the base year revision for the CPI in August 2011.1 Policy Board members make their forecasts in terms of a range of values rather than a point estimate, and they then attach a probability of realization to each of the values.
The prudence we require in the assessment of loans helps to safeguard the integrity of banks’ capital and contributes to increasing the market’s confidence in them. Analysts and investors want the amounts stated in balance sheets to reflect the actual quality of banks’ assets and provide reliable indications of the risks involved. Prudent provisioning policies encourage the disposal of impaired items.