The forecast for the next few quarters is revised because new data has been taken into account. The new forecast for 2011 is slightly above that published in September because the oil price has increased. The increase in inflation in the third quarter of 2011 is attributable to a base effect, because inflation in the third quarter of 2010 was comparatively low. Compared to the forecast published in September, inflation in 2012 and 2013 rises less steeply, particularly due to the fact that the economic outlook for Europe is less favourable than in the previous quarter. Towards the end of the forecast horizon, inflation rises briskly and exceeds the upper bound of 2%, assuming that the three-month Libor remains at the current level. This shows that the current expansionary monetary policy cannot be pursued for the entire forecast horizon without compromising long-term price stability. Due to the risks mentioned previously, this forecast is associated with a very high level of uncertainty. BIS Review 173/2010  3  4  BIS Review 173/2010
BIS Review 17/2005  3  In order to establish a common data set on which to base this review, the Committee has decided to begin a recalibration exercise in autumn this year. In addition, national field tests are already underway in some jurisdictions, while there will be a period of time during which banks will calculate their capital requirements in parallel under the 1988 Accord and under Basel II. We recognise that these tests and reviews will demand resources from both banks and supervisors. Yet I must emphasise that neither banks nor supervisors will be able to evaluate the calibration of the new framework – and hence its effectiveness – if banks do not participate fully and seriously in these initiatives. Only you can provide the data that all of us will need to ensure that Basel II functions as we intend and that it does not create unintended side effects. Consistent and co-ordinated implementation Second, supervisors are working to avoid unexpected outcomes by developing, in advance, a better understanding of how various jurisdictions will apply Basel II. This is also helpful to developing a more consistent set of expectations across countries. In a world where the business of banking is increasingly international, the need for supervisors to cooperate and to strive for more consistent principles would exist even if Basel II did not.