If one casts one’s mind back to a little more than 12 months ago, global financial markets were in a buoyant mood. The global economy was believed to be expanding and markets almost perversely were taking heart from the fact that many central banks were feeling confident enough to either remove their “special or extraordinary stimulative measures” or to even begin tightening their interest rate policies in the case of Trichet’s version of the European Central Bank. The Reserve Bank of Australia was also raising rates and, prior to the earthquake, it had been assumed that the RBNZ would follow suit as the NZ economy firmed. Optimism was rife and markets seemed to have become almost “Teflon-coated” when it came to bad news – good data was being seized upon but bad news was being ignored.
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