Chart 6 Wage growth on the rise Wage growth is rising and reached the highest level seen in over a decade last year, turning out higher than we had expected. This can be ascribed in large part to a tight labour market and improved profitability in some business sectors. The social partners expect wage growth to rise further this year, and expectations have increased in recent months. Wage growth is projected to be around 5 percent this year,  2/3  BIS - Central bankers' speeches  which is higher than we projected in December. While wage growth did not keep pace with price growth last year, we expect wage inflation to be slightly higher than price inflation this year. Higher wage growth means higher business costs, which will likely also contribute to sustaining inflation. Figure 7. Further rate rise most likely in May It is our responsibility to ensure that inflation falls to 2 percent. At the same time, we will avoid raising the policy rate beyond that needed to curb inflation. There is considerable uncertainty about future economic developments, but we will most likely raise the policy rate again in May, followed by a further rise to around 3.5 percent in summer. This could mean an increase in the residential mortgage rate to between 4½ and 5 percent. Chart 8 Prospects for lower inflation and somewhat higher unemployment In our current projections, inflation falls back towards 2 percent over the next years.
When the AIG began its work, it quickly became clear that there was no “one-size-fits-all” approach to implementing Basel II. Rather, implementation should be tailored to the specific circumstances of a bank and the jurisdictions it operates in. In this regard, one of the primary methods the AIG uses to promote convergence is to encourage home supervisors of the 50 or 60 largest internationally active banks in Basel Committee member countries to engage in practical outreach to host supervisors and the banks to open clear lines of communication and cooperation in based on banks’ own implementation plans. Each home supervisor coordinates the work in a way that is most practical in light of the particular bank circumstances and its own supervisory approach. It is clear that successful implementation rests on adequate flows of information, as well as trust among supervisors. As we go forward, we need to strike an appropriate balance between top-down and bottom-up consistency. That is, the top-down rules and the bottom-up convergence of supervisory practices should work together to reinforce a level playing field. This balance will naturally be dynamic. Early on, the scales were tipped toward developing a common set of rules. Now that these rules are in place, the scale is tipping the other way toward enhancing communication and convergence among  2  BIS Review 46/2006  supervisors in the implementation of these rules.