next year and two ideas that have been in the discussion stage be developed into concrete proposals. first, the proposal for a capital surcharge for systemically important banking organizations is nearing completion. the basel committee continues to refine the methodology to be used in identifying the firms and calibrating the surcharge amount – perhaps a byproduct of the fact that this methodology had to be developed in the basel committee without benefit of prior precedent. but i have confidence that this work will be successfully completed. the second ongoing initiative – work on designating non - bank sifis – has to date been pursued mostly in the iais and thus has concentrated on insurance companies. it is important to take the time to evaluate carefully the actual systemic risk associated with these companies, and to understand the amount of such risk relative to other financial firms, before fixing on a list of firms and surcharges. but this seems to me a realistic goal over the next six months. bis central bankers ’ speeches third, we should build on the very good analytic work in the basel committee, both on simplifying capital requirements for credit risk and on fashioning standardized capital requirements for market risk, to apply standardized credit and market risk capital measures to all internationally active banking firms. as i mentioned earlier, the united states has already adopted such a requirement for capital requirements on credit risk. these standardized measures serve as a floor to guard against the potential for models - based capital measures to understate capital needs under some circumstances. they are also substantially less opaque than, for example, the advanced internal ratings - based approach of basel ii, and thus would provide more comparable measures that are also more amenable to international monitoring. fourth, i would hope to see a requirement proposed for large internationally active financial institutions to have minimum amounts of long - term unsecured debt, which would be available to absorb losses in the event of insolvency. as i mentioned earlier, work on resolution continues, albeit at different paces in different jurisdictions. given the complexities arising from the independent, often differing national bankruptcy and insolvency laws, the goal of achieving a fully integrated resolution regime for internationally active financial firms may take a good deal of time. but a minimum long - term debt requirement would at least provide national authorities with sufficient equity and long - term debt in these firms to bear all losses in the event of insolvency, and thereby counteract the moral hazard associated with taxpayer bailouts without risking

declined, on balance, since the onset of the financial crisis, reflecting high levels of resource slack and stable longer - term inflation expectations. indeed, over the 12 months ending in january, prices for all of the goods and services consumed by households ( as measured by the price index for personal consumption expenditures ( pce ) ) increased by only 1. 2 percent, down from 2. 5 percent in the year - earlier period. wage growth has slowed as well, with average hourly earnings increasing only 1. 9 percent over the year ending in january. in combination with productivity increases, slow wage growth has implied very tight restraint on labor costs per unit of output. fomc participants see inflation remaining low ; most project that overall inflation will be about 1 - 1 / 4 to 1 - 3 / 4 percent this year and in the range of 1 to 2 percent next year and in 2013. private - sector forecasters generally also anticipate subdued inflation over the next few years. 3 measures of medium - and long - term inflation compensation derived from inflationindexed treasury bonds appear broadly consistent with these forecasts. surveys of households suggest that the public ’ s longer - term inflation expectations also remain stable. although overall inflation is low, since summer we have seen significant increases in some highly visible prices, including those of gasoline and other commodities. notably, in the past few weeks, concerns about unrest in the middle east and north africa and the possible effects on global oil supplies have led oil and gasoline prices to rise further. more broadly, the increases in commodity prices in recent months have largely reflected rising global demand for raw materials, particularly in some fast - growing emerging market economies, coupled with constraints on global supply in some cases. commodity prices have risen significantly in terms of all major currencies, suggesting that changes in the foreign exchange value of the dollar are unlikely to have been an important driver of the increases seen in recent months. the rate of pass - through from commodity price increases to broad indexes of u. s. consumer prices has been quite low in recent decades, partly reflecting the relatively small weight of materials inputs in total production costs as well as the stability of longer - term inflation expectations. currently, the cost pressures from higher commodity prices are also being offset by the stability in unit labor costs. thus, the most likely outcome is that the recent rise the survey of professional forecasters projects pce inflation to run at about 1 - 1 / 2 percent in 2011 and to subsequently rise gradually to nearly