The so-called “tsunami” of adverse economic outcomes in the period subsequent to March 2007 will lose momentum as inflation abates, the balance between aggregate saving and investment improves, the process of financial deepening intensifies and better use is made of the potential for capture of resource rents in the current commodity cycle.
"New Zealand started raising rates in January 2004, just ahead of the US Federal Reserve's long climb back towards neutral real rates. Initially as we put up the Official Cash Rate, New Zealand shortterm market rates rose as expected, but the long end remained stubbornly low, anchored to US rates expectations.