Furthermore, in the southern European and Baltic economies, growth accelerated because they were able to attract considerable foreign investment on the basis of a stable exchange rate and low interest rates due to the adoption of, or a peg to, the euro. China registered robust growth as its entry into the World Trade Organization (WTO) helped it to attract direct foreign investment.
This consideration was behind the decision to reduce the OCR in March so as to mitigate the near-term negative impact of the February earthquake. It is appropriate for monetary policy to remain supportive, given the continued downside risks to economic activity stemming from the Canterbury earthquakes and more broad fragility in the New Zealand economy.