While it might seem unlikely that New Zealand interest rates would ever fall below those in Australia and the United States, it is worth recalling that New Zealand’s long-term interest rates were somewhat lower than those in Australia through the first half of the nineties and slightly lower than those in the United States for a time in 1994; and that most interest rates in Canada, Singapore, Switzerland and the European Monetary Union are below those in the United States today.
The growth of real GDP not only failed to slow, it climbed further, to about a 5½ percent annual rate in the first quarter, according to the current national income accounts. Domestic private demand for goods and services - including personal consumption expenditures, business investment, and residential expenditures - was exceptionally strong.