The Reserve Bank might well be blamed for the sharp rise in interest rates, and to be sure we would not be at all opposed to such an increase since if the exchange rate fell sharply a marked increase in interest rates would be needed to keep inflation under control.
But it is also true that, unless the Bank moved to pump money into the economy aggressively, any sharp outflow of capital, whether owned by foreigners or owned by New Zealanders, would necessarily result in a sharp increase in interest rates, BIS Review 8/1998  -7-  since those selling New Zealand securities and other assets would be forced to increase the yields offered on those assets in order to encourage others to buy them.