The cumulative 100 basis points hike was a recognition that it was necessary to act promptly and preemptively to: 1) address price pressures that were coming more evidently from secondround effects; 2) guide inflationary expectations, to arrest self-perpetration into higher actual inflation; and 3) rein in inflation and allow it to fall within the target range over the policy horizon.
However, the financial market implications from asset allocation perspective may be transitory rather than permanent: other investors come in, and the phase-in period of Solvency II is very long and gradual. It remains to be seen to what extend the risk weight of the internal models will significantly differ from the standard regulatory risk weight. 3.