2  BIS central bankers’ speeches  terms of trade was expansionary for incomes and investment, which would likely see demand growth remain pretty strong even as fiscal stimulus spending unwound. The exchange rate was working to offset a good deal of this expansionary impact, by restraining some parts of the economy exposed to international trade but not exposed to mining.
Nonetheless, given the size of the terms of trade rise, and the fact that the economy started from a position of reasonably low unemployment, it was thought that underlying inflation was more likely to start to go up than to keep falling. On the evidence we have so far, that’s what seems to have been happening.