Clearly, in these instances global investors’ views about the impact of rates on the growth trajectory overruled other influences and conventional relationships. The build-up of carry trades globally has been mentioned earlier in this address as a current example of imbalances caused by different monetary policy stances among countries, within the context of globalised financial markets.
And the job market, though no longer contracting at the pace we saw in 2008 and earlier this year, remains weak. Household spending is unlikely to grow rapidly when people remain worried about job security and have limited access to credit. Inflation is affected by a number of crosscurrents.