It is important for monetary policy that expectations of the interest rate are in line with the repo rate path. This is because it is market expectations of interest rate developments, and not the Riksbank’s own repo rate path, which determine the interest rates offered to households and companies. In addition, households’ and companies’ own expectations of interest rates govern their actions. Thus, expectations of future interest rates are important for the development of the economy. At the same time, the Riksbank’s ability to steer expectations in the longer run is limited in that we only steer the shortest interest rate, the repo rate, while the repo rate path is only a forecast. During the summer, market expectations of the repo have risen slightly in the short term, but fallen by more than 30 basis points in the longer run. Household expectations of variable mortgage rates, on the other hand, have risen significantly according to the National Institute of Economic Research. They are now largely consistent one and two years ahead with the Riksbank’s repo rate path from the most recent monetary policy meeting. However, households were still expecting a relatively low mortgage rate five years ahead. BIS Review 109/2010  7  Normalisation of monetary policy in general The normalisation of monetary policy includes, in addition to interest rate raises, the phasing out of the support the Riksbank has given to the banks.
As part of the efforts to improve the standard of pen-testing in Malaysia, Bank Negara Malaysia facilitated the formation of a task force last October, to set up a Malaysia chapter of the UK-based Council of Registered Ethical Security Testers or CREST, which will serve as a certification body for ethical hackers. We believe that this is a good platform to grow domestic talent in this area and promote international best practices in penetration testing. c. The Bank has also launched the Operational Risk Integrated Online Network or commonly known in the industry as the ORION system, to enhance the standard of operational risk 2/5  BIS central bankers' speeches  management in the financial sector. ORION is a risk surveillance system that consolidates information on operational risk incidences, including cyber-attacks. The system will strengthen the Bank’s ability to perform system-wide monitoring and early detection of developing trends in cyber-attacks and frauds within the financial sector. Moving forward, Bank Negara Malaysia is looking to address identified gaps in technology risk management practices within the financial sector. As part of this effort, the Bank is in the midst of conducting a comprehensive review of existing technology risk guidelines, including enhancing the expectations for the board and senior management to play a more active role in managing technology risk, and enhancing the resilience of IT infrastructures such as data centres. In today’s world where there is increasing uncertainty of what the future may hold, it is no longer possible for risk managers to rely solely on historical trends.