Those same conditions will be ideal for fostering new firm creation, and as we all know, new companies create a disproportionate share of new jobs. The implication is clear: a sustained expansion in our exports not only will represent new demand, it will ignite the rebuilding phase of our business cycle, which will create new supply.
This virtuous cycle continues until the excess capacity in the labour market is reabsorbed. By our estimation, it will take around two years for us to use up our excess capacity, at which point inflation will be sustainably at our target.