On the real economy, we are starting to notice the odd positive economic indicator in the run of US monthly data, in contrast to the universally negative outcomes a few months ago. Let’s hope this continues. From Australia’s perspective, no discussion of the global economy is complete without reference to China.
However, under the deflation that lasted for over 15 years, medium- to long-term inflation expectations appear to consistently remain lower than those in the United States. The challenge is to re-anchor these expectations at around 2 percent, comparable to the level in the United States.