I spoke of three such factors: global supply chains, the rise of China and the digital economy. These developments have contributed positively to the global economy and have been evident locally in low traded goods inflation and a rising terms of trade.
The domestic economy and inflation process have also been affected by the trend towards a more globally integrated economy, increased labour mobility and the momentum of low inflation expectations – which have likely flattened the New Zealand Phillips curve. While the degree and perseverance of this effect are very uncertain, they appear to have reduced the responsiveness of inflation to changes in economic slack.