At its meeting on November 8, the Governing Council therefore decided to cut rates by half a percentage point. It has lowered its key interest rates during this year by 150 basis points, to 3.25 percent. A generally stable currency, and markets that trust the stability-orientation of central banks, make for lower price increases at times of crisis.
These models are used to calculate internal economic capital allocations for various sub-portfolios of the bank, and it is because these internal capital allocations often differ substantially from the 8 percent regulatory standard that the problems arise.