This may have in part reflected expectations for the terms of trade, which for a time remained at elevated levels even when the actual terms of trade had declined. [5] It is also likely to have reflected the effect of very low interest rates globally and unconventional monetary policies adopted by the major advanced economies in response to the global financial crisis.
Meanwhile, the Reserve Bank eased monetary policy from late 2011 in response to the prevailing weaker economic conditions in Australia. However, from around 2016, the Bank was balancing the case for a faster return of inflation to the target range by lowering the cash rate further, against the medium-term risks associated with an increase in what were already high levels of household debt.