What we are looking for is interest rate cuts to be beneficial to the market.

Rate cuts may spur credit growth, however a government will have to keep a closer eye on it's inflation in order to minimize the demand pull inflationary effect

The real short-term outlook for us is pretty positive given that we don't see a Fed rate hike in August and that due to political noise, if you will, we are not going to see a rate hike in October. But on the earnings front it is a different issue. Looking into 2000, our longer-term forecast, we've had two great years of earnings growth. We think it is going to be pretty difficult to show up with another year of 30-to-40 percent earnings growth. So, consequently, our message has been a lot more selective about the securities that we want investors to focus on.

It feels a lot different this time, ... Traditionally, you get interest rate cuts to stimulate domestic demand that is just foundering. ? But the U.S. economy doesn't need a kick in the pants right now to get it going.

The FX market is watching interest rate markets and short- end yields have come off and that's because core CPI was tame. For the dollar to continue to do well, you need interest rate expectations to continue to move in its favor, and with a fair amount of tightening already priced in, that's getting harder and harder.

We have said throughout the campaign that New Zealanders would pay for National's tax cuts through higher mortgage and interest rates and today's statement from the bank bears that out,