While I am generally sceptical that this year’s events can be explained by a sudden focus on trends in the current account position, it may be more promising to think about developments from the perspective of capital flows.
This is reflected in our forward guidance on net asset purchases and interest rates, as well as our decision to reinvest the principal payments received under the APP for as long as necessary. With reflationary dynamics slowly taking hold, we now need to ensure that overall financing conditions continue to support that reflationary process, until they are more durable and selfsustaining.