Second, central banks should contribute to maintaining well-functioning financial markets in general, and to well-functioning money markets in particular, while recognising the limitations of their ability to ensure that any market – which after all is constituted by the private sector – acts in a particular manner.
To be sure, marked increases in available global capacity and the deregulation of key industries have removed bottlenecks and increased the competitive supply response of many economies, especially ours, and these developments have been influential in suppressing price increases. It would be an exaggeration to imply that, whenever a potential cost increase emerges on the horizon, a capital investment is available to quell it.