•  G-sec offer prospect of capital gains As there is an inverse relationship between bond price and interest rate, there is a prospect of capital gains when the interest rates moderate. One, however, must be conscious of market risks that could result in losses in case the interest rate cycle reverses.
The Reserve Bank of New Zealand probably has less direct control over financial market prices than any other central bank in the world - we haven’t intervened in the foreign exchange market for 13 years, for example, and don’t fix any single interest rate - but I do not deny for a moment that we intervene to influence overall monetary conditions.