These policy settings, intended to resolve the combination of slow growth and over indebtedness, and conducted in a globalised world economy; contribute at some level to the flow of capital into emerging markets and the developing world.
We consider that the second-round effects are unlikely to emerge in the near term, given the current level of the domestic output gap, the inflation expectations of households, and firms' price-setting behavior. Developments in wages are one of the important indicators pointing to the emergence of second-round effects, and so far wage growth has been relatively weak.