Firms report an absence of pricing leverage because nothing gives a firm pricing power like excess demand and there is no apparent excess demand for U.S. firms, especially in the global market place where there is plenty of slack abroad. The most intriguing explanations of the recent favorable performance are structural changes which may have expanded the limits to productive capacity and trend growth.
In the emerging markets, mainly those with a current account deficit, we saw rapid depreciations, and in some of those countries, the interest rate was raised in order to deal with these depreciations. In contrast, the tapering process in the US continued, but both the US and Europe announced that the low interest rate would remain for a prolonged period.