As supervisors, we must prepare for such developments. In many ways, however, the banking and financial system have changed dramatically in the past decade both in terms of structure and diversity of activities. Risk management practices have also advanced, helped by technological and financial innovations.
Of course, to the extent that such a bias in a core inflation measure is stable or predictable, the central bank could easily take this into account in setting monetary policy. But even in that case, differences in average rates of inflation between the core measure and overall inflation could complicate communication with the public.