Via Paul Dales at Capital Economics:
We suspect that history will be turned on its head over the next decade or so with Australia and New Zealand experiencing lower inflation rates than some of their peers. It follows that their exchange rates are likely to be weaker than otherwise and that their government bond yields may be lower.
The health of demand will continue to affect inflation, but whether inflation is much higher or much lower over the next decade will mostly depend on the influence of structural forces, such as globalisation and the independence and mandates of the central banks.
