They have come to recognize limitations to their capacity to conduct monetary policy on their own. In addition to this, the central bank's judgment and forecasting of the economic situation have been made more difficult, owing to the changes in the economic structure and heightened uncertainty arising from globalization.
Confident households, enjoying gains in income and wealth and benefitting from the reductions in intermediate- and longer-term interest rates to date, should continue to increase their spending. Firms should find financing available on relatively attractive terms to fund profitable opportunities to enhance efficiency by investing in new capital equipment.