11 Some of the factors behind this excess of saving over investment include the surge in revenues of oil and commodity exporters, a retreat in Asian investment demand from the boom that preceded the late 1990s, and a reduction in fiscal deficits in some Latin American countries. But these low bond yields also have a nominal aspect.
A central bank can best contribute to economic growth and rising standards of living by fostering a financial environment that promotes overall balance in the economy and price stability. Maintaining an environment of effective price stability is essential, because the experience in the United States and abroad has underscored that low and stable inflation is a prerequisite for healthy, balanced, economic expansion.