Medium term influences As the governments of developed countries in the western hemisphere struggled to deal with the consequences of the GFC, their spending and borrowing ballooned causing fiscal deficits to rise at pace.
The central banks in these countries also had a role to play by reducing policy interest rates close to zero – “the lower bound” – and embarking on programmes that substantially expanded their monetary bases (quantitative easing) in an attempt to push up domestic demand while depreciating their currencies.