Growth forecasts were revised down. Experience suggested that the mood should have been more buoyant. Policy was accommodating the recovery from the global and European financial crises. There was a fall in commodity prices, particularly oil prices (Graph 1). Declines in oil prices are typically seen as expansionary, because they often imply that supply has increased, and this was precisely what OPEC was doing.
Lower oil prices also often support growth. Most of Australia’s major trading partners are net oil importers and are better off if the price of oil declines relative to other prices.1  1 / 10  BIS central bankers' speeches  But rather than being a catalyst for growth, lower oil prices were an indicator of weakening global demand.