would be substantial. as the proposal describes, federal reserve staff estimates these changes to result in an aggregate 20 percent increase in total risk - weighted assets across bank holding companies subject to the rule, although some commenters have projected much greater effects on some firms. 3 while the actual impact on binding capital requirements will see, e. g., financial services forum, american bankers association, bank policy institute, and securities industry and financial markets association, “ comments on regulatory capital rule : large banking organizations and banking organizations with significant trading activity ” ( december 22, 2023 ), r1813 _ 122223 _ 156400 _ 337982526593 _ 1. pdf ( federalreserve. gov ) ( noting that for the largest u. s. firms, the proposal would result in a greater than 30 percent increase in capital requirements, and a greater than 33 percent increase in risk - weighted assets ). - 5vary by firm, it is apparent even with the incomplete information available today that this will represent a large increase in capital requirements. in october of 2023, the federal reserve launched a data collection to gather more information from the banks affected by the basel iii capital proposal. 4 the purpose of this quantitative impact study was to help better understand the estimated effects of the proposal. my understanding is that the federal reserve will release its analysis of those findings and some aggregated information for comment. and just as for the initial proposal, stakeholder feedback on this quantitative impact study and staff analysis will be very instructive as we seek to analyze and understand the expected impacts of the proposed capital reforms. based on the information available, increasing capital requirements as initially proposed could result in significant harm to the u. s. economy through the impact on u. s. businesses, while failing to achieve the intended goals of improving safety and soundness and promoting financial stability. much of the public feedback and concern focused on the calibration of the proposal and the corresponding impact across a number of industries. farmers, ranchers, and agricultural producers that use derivatives to hedge price risks in agricultural supply chains have noted that the increased costs of providing these services from the proposal could lead banks to limit their availability in the marketplace. 5 small - business owners ( including builders, manufacturers, see board of governors of the federal reserve system, “ federal reserve board launches data collection to gather more information from the banks affected by the large bank capital proposal it announced earlier this year, ” press release, october 20, 202

all types of shocks and can at times be misleading about what is happening to the underlying rate of overall inflation. and if increases in headline inflation prove more persistent than initially expected, central bankers must be vigilant to ensure that they do not become embedded into expectations and thereby generate substantial second - round effects on inflation. finally, because price stability ultimately involves control of overall, headline inflation, which after all is the inflation measure that households really care about, central bankers should and do pay attention to headline inflation as well as to core inflation measures. a core inflation measure should not be seen as a substitute for thorough and careful analysis of the forces that are driving our economy and the inflation process. more details on inflation forecasting at the board are in bernanke ( 2007 ). references aoki, kosuke ( 2001 ). " optimal monetary policy responses to relative price changes ", journal of monetary economics, vol. 48 ( august ), pp. 55 - 80. armour, jamie ( 2006 ). " an evaluation of core inflation measures ", bank of canada working paper 2006 - 10 ( ottawa : bank of canada, march ). bagliano, fabio c., and claudio morana ( 2003 ). " measuring u. s. core inflation : a common trends approach ", journal of macroeconomics, vol. 25 ( june ), pp. 197 - 212. bean, charles ( 2006 ). " commentary : impact of globalization on monetary policy ( 40 kb pdf ) ", speech delivered at the federal reserve bank of kansas city 30th annual economic symposium, jackson hole, wyo., august 26, www. kansascityfed. org / publicat / sympos / 2006 / sym06prg. htm. bernanke, ben s. ( 2007 ). " inflation expectations and inflation forecasting ", speech delivered at the monetary economics workshop of the national bureau of economic research summer institute, cambridge, mass., july 10, www. federalreserve. gov / newsevents. blinder, alan s. ( 2006 ). " monetary policy today : sixteen questions and about twelve answers ", in s. fernandez de lis and f. restoy, eds., central banks in the 21st century. madrid : banco de espana, pp. 31 - 72. bodenstein, martin, christopher erceg, and luca guerrieri ( 2007 ). " optimal monetary policy in a model with distinct core