So let me spend a few minutes comparing where we are on a few dimensions relative to some of our counterparts.4 Our current rate of inflation, while still too high, is the second lowest in the G7 advanced economies.5 Japan’s is lower, at 4%.
The first was the excessive growth of overall credit, especially to the household sector for housing purchases, and the consequent rapid increase in housing prices. The second was that the exchange rate could be pushed quickly to an unrealistically high level.