An important element of this flexibility is the exchange rate (Graph 9). When the terms of trade initially started to fall and the decline in mining investment was clearly in sight, the exchange rate was relatively slow to adjust. On a number of occasions, the RBA drew attention to this.
At the beginning of the year we had weakly positive signs. With QE, this development has strengthened. But isn’t there also a danger of “overdosing”? The Governing Council will carefully monitor the situation every month. We have now adopted a plan that we intend to follow up on: we are making purchases to the tune of € billion every month until September 2016.