Countries receiving crossborder capital flows have generally sought to strengthen their economic and financial fundamentals since the “taper tantrum” of mid 2013. The fact that the Fed has signalled as clearly as possible the way it thinks about these issues should also help reduce instability. On the other hand, “guidance” is no guarantee of smooth sailing.
Moreover, we stand today at a highly unusual juncture. We see a combination of remarkably low yields on financial  2  2  See ‘The Challenge of Prosperity’, Address to the Committee for Economic Development of Australia (CEDA) Annual Dinner, Melbourne, November 2010. BIS central bankers’ speeches  assets, compressed risk premia and diverging outlooks for monetary policy across the major jurisdictions.