Supervisors encourage banks to adopt best practices, and I believe that we should also seek to achieve the highest supervisory standards. First, we should clearly communicate our expectations. It is wasteful, costly, and unnecessary when compliance activity occurs because expectations have not been clearly articulated or understood. Examiners should always be able and available to explain written guidance.
In determining the outlook for inflation, the gravitational force of long-term inflation expectations is especially important. Some survey measures of inflation expectations have declined recently.