This means that market participants are responding to the data, their changing forecast, and their understanding of our policy reaction function. Long-term rates are, after all, based on current and expected future short-term rates. Expected future short-term rates, in turn, are very much a function of the Fed’s policy response.
iii)  The drivers of the expansion have changed Initially the expansion was driven by improving terms of trade (which improved steadily from September 2009 and reached a 40-year high in June 2014), growing trade with China under the Free Trade Agreement, and the stimulus from the 575 basis point decline in the official cash rate (OCR) between mid-2008 and mid-2009.