With respect to the economy more broadly, it has evolved largely as we expected it would when we published the July Monetary Policy Report. Consumer spending was strong in the second quarter, with a recovery in hard-todistance sectors boosting spending on services in particular.
To return to my automobile analogy of recent speeches, we needed to put the “pedal to the metal” to buck those headwinds and get the economy going. The monetary stimulus has done its job. The economy has been gathering speed and absorbing unused capacity.