The Bank’s view is that a large, sustained increase in demand (most notably in China) is the primary driver of this boom. With more than three-quarters of commodities above their longterm averages, the breadth and durability of the rally underscores this conclusion (Chart 5). This is not to say commodity prices will not continue to fluctuate, sometimes abruptly.
Recent declines could reflect a re-rating of global growth prospects combined with some adjustments to positions of financial market participants. But these are fluctuations around high levels.