. institutions such as gik, ned, uet, nust, fast, etc. should not only organize refresher technical courses for the executives working in engineering profession but also hold management courses for the middle level managers of various companies. there is an acute shortage of project management skills in this country. to begin with, our engineering universities can bring in foreign trainers or institutions as partners and then gradually build up their own capacity. continuous collaboration with leading universities such as caltech, georgia tech, etc. would be the best way to value addition of our engineering professionals. at the last stage, the finished product rising from within the organization or recruited from outside should remain engaged in learning and skill upgradation. at this stage, the job content emphasizes less of technical skills but more of leadership and managerial skills. we do not realize how much difference a good manager can make to the efficiency and productivity of an organization. but our senior managers feel they have reached the nirvana, they know everything and nobody can teach anything to them anymore. i believe they are sadly mistaken as they do not realize how much they are missing in terms of their own personal and professional growth. management development programs both at our universities and institutes of higher learning and at foreign institutes should be encouraged and made an integral part of their career management. the model that i have laid out is nothing new or spectacular. the different elements of this model do exist in bits and pieces and have been applied in varying intensity across many companies in pakistan. i have mostly relied upon the examples of banking industry as i am more familiar with the developments there. i do not know very much about the other sectors and i am sure a lot must be happening there. if it is not happening, then i will urge the universities, institutes, industry associations to work together and test this model, adapt it and apply it widely and in a systematic say. i am confident that the skill shortages, which we are observing today in pakistan, will not only disappear domestically but we will become the conduit for supplying these skills to other countries and a magnet for outsourcing business.

this regard, it is interesting to note the relatively close correlation between house prices and the nz dollar over the last 15 years. without claiming a direct relationship between the two, this goes some way to illustrate the extent to which persist domestic inflation pressures have underpinned the outlook for interest rates, which in turn has maintained upward pressure on the nz dollar. accordingly, a sustained retracement in the nz dollar from the highs seen in recent years could be contingent on our efforts to rein in domestic inflation pressures. figure 9 : house prices and the nz dollar trade weighted index ( twi ) source : quotable value ; rbnz of course the inward capital flows that have kept pressure on the nz dollar would not have happened without a strong domestic demand for borrowing. in this case it is new zealand households ’ desire to keep investing in housing, while at the same time consuming strongly, that fuels their demand for funds, and represents the other leg to these international transactions. 5. how does it affect monetary policy? no central banker today can ignore these effects on domestic monetary policy. a recent speech by ben bernanke 4 observed that financial market globalisation has made the fed ’ s analysis much more complex. he notes that even for the us there is no such thing as total monetary independence. for example, correlations between long term interest rates in the us and other industrial countries have risen significantly. having said that, he concludes that, despite alan greenspan ’ s term of “ conundrum ”, this has not significantly constrained their ability to influence domestic financial conditions. this is more problematic for a number of small open economies with higher interest rates – not only new zealand, but also iceland, hungary, australia and south africa. the downward pressure created by abundant global liquidity on market interest rates has had implications for the operation of monetary policy. in general terms, the reserve bank has most impact on the shorter end of the yield curve, both by setting the ocr itself and influencing market expectations about the outlook for monetary policy. but further out the yield curve, other factors – including global interest rate developments and country risk premia – also influence interest rate levels. figure 10 : a stylised representation of the relative influences on the yield curve source : rbnz low global interest rates have restrained the rise in longer - term interest rates relative to the upward pressure monetary policy has been able to exert on shorter - term interest rates during this tightening cycle. this has seen the yield curve progressively flatten