It did decline somewhat during the financial crisis, but it is expected to increase strongly again over the period ahead, driven importantly by the mining sector. Exports are also increasing at a solid pace at present, as earlier increases in mining capacity are coming on stream.
Let me emphasise, though, that many inflation-targeting central banks retain a considerable degree of flexibility when putting this advice into practice – although in a very different way from the meaning the term “flexibility” has received in theoretical work. I will return to this point shortly.