capital, liquidity and provisioning vary dynamically according to macroeconomic circumstances. The macroeconomic triggers could arise either from the changes in the normal economic cycle or sharp asset price movements. Conceptually, this is supposed to be in addition to stricter prudential standards for capital, liquidity and leverage across the board. 5.
Let me now try to shed some light on how important this slack story is in explaining the low 2/5  BIS central bankers' speeches  inflation or whether also other factors play a role here. A Phillips curve analysis – allowing for time-variation in the parameters – can give us an idea.