In theory, lower perceived risk would put downward pressure on the risk premium component of interest rates that New Zealand faces on its external 12 The share of New Zealand’s non-equity liabilities with residual maturity of one year or less declined  from over 50 percent just prior to the GFC to 31 percent in the March 2017 quarter.
Since those days, we've all learned that it does no good to try to shelter the economy from adjustments driven by global changes such as large swings in energy prices. The need for flexibility So, let me talk a bit more about flexibility. I'm going to address this from two perspectives.