Let me turn back to the first hearing of this Parliament’s term which took place with my predecessor in September 2009. At the time, the economy was just bottoming out in the aftermath of the great contraction which had ensued after Lehman’s failure. We were witnessing negative inflation rates. In this environment, the outlook was seen to be broadly in line with price stability.
In addition, our near-zero policy rate and the improving economic outlook have induced shifts by private investors into longer-term and riskier assets, helping to reverse a portion of the previous spike in spreads that occurred as the economy and financial markets deteriorated.