We can then observe that Australia stands out among developed countries in terms both of the extent of the rise in our terms of trade, and the strength of growth of domestic demand over the past few years. It is understandable, then, that pressure on underlying inflation, particularly from domestic sources, has also been somewhat greater. Monetary policy had to respond to that.
In fact, I will advocate the opposite view later when I turn to the role of monetary policy. What I want to say here is the following: provided the appropriate policy response has been put in place to ward off serious risks of nominal de-anchoring, any outbreak of adaptive expectations will be transient.