SLR is similar to LCR in composition except that LCR is a more sophisticated tool to ensure liquidity under stressed conditions that takes account of the liquidity profile of both assets and liabilities. LCR does not impound the funds of banks for lending beyond what is assumed to be necessary to maintain their liquidity on an on-going basis.
Nevertheless, the year-on-year decline in the CPI is likely to continue for a relatively long time, because substantial slack seems to have emerged in the economy due to the significant economic downturn from autumn 2008 and because the pace of improvement in the supply-demand balance is expected to be slow.