I would like to take this opportunity to offer some thoughts on this matter. As the Bank announced when it introduced the price stability target in January 2013, the target has been set in terms of the year-on-year rate of change in the CPI.
Models analyze a corporate customer's or borrower's probability of default, the loss in the case of default, and the borrower's likely exposure at the time of default, taking into consideration future draw-downs. The greater use of credit models in retail transactions provides a stronger framework to assess risk and  BIS Review 56/2002  1  ensure that pricing reflects credit quality.