More recently, it has been the emergence of capacity constraints in some parts of the economy. No-one should be surprised by this development; it would be remarkable for any economy in the fourteenth year of an expansion if this were not to happen.
In recent years, accommodative monetary policy has contributed to low interest rates, a flat yield curve, improved financial conditions more broadly, and a stronger labor market. These effects have contributed to balance sheet repair among households, improved financial conditions among businesses, and hence a strengthening in the health of the financial sector.