World financial conditions would also change as heightened uncertainty and a rise in global risk aversion would likely lead to higher external funding costs even as global growth slows. In such a situation portfolio flows may shift to larger more liquid financial markets and our exchange rate could fall, placing upward pressure on domestic prices and eroding real incomes.
ii) Fiscal expansion in the US 9 / 11  BIS central bankers' speeches  As with the protectionist sentiment, it is too soon to be specific about the nature and size of fiscal stimulus in the US. However, the possibility of a significant US fiscal stimulus represents an upside risk for New Zealand.