It is the job of prudent bankers to raise awkward questions about the sustainability of their bank’s business model and their ability to generate profits in the long-run and not just in the short-term. It is also worth remembering the words of Warren Buffet that he is fearful when others are greedy, and greedy only when other are fearful.
As well, when households were asked to evaluate the probability of various inflation outcomes over the next two years, their answers centred around the Bank’s 1 to 3 per cent target range. This is an encouraging sign that household expectations are anchored to the target.