In my view, it would be fair to assume that the Bundesbank results provide a lower and upper bound for the size of the effects of our asset purchases - with respect to both output and inflation. But they also demonstrate vividly that the exact size of the effect is highly uncertain.
But the combination that would be most damaging to the Australian economy would be if the household sector were to continue putting itself into a more exposed position at the rate it has over the past few years while, at the same time, a further weakening of the world economy was starting to feed through to Australian activity and incomes.” The last-mentioned of these possible outcomes, and the most unfavourable, was a distinct possibility in the middle of last year, but fortunately it did not come to pass.