To do so would risk a serious boom-bust cycle, and would require abrupt and decisive increases in interest rates later to regain control of inflation. A small, cautious step early is the recipe for avoiding the necessity of a sharper destabilizing move later on. What does the record show?
Mapping the BlackRock loan losses into capital requirements for PCAR2011 entailed some judgment as to how much of future prospective losses to provide for in the banks’ capital right away. Here there was some tension between accounting and economic approaches.