GDP figures showed the economy grew just 0.2% in the June quarter. Market expectations were centred around 0.8% and the Reserve Bank was expecting 0.9%.

ANZ Market Focus says bad luck comes in threes and so too, it seems do surprises.

"First came the Reserve Bank's sudden change of heart; second came the Fed's preparedness to provide "additional accommodation"; and last but not least was last week's GDP surprise."

It says the net result has been lower interest rates across the yield curve, reinforcing the view that the Reserve Bank is firmly on hold for the time being.

ANZ says in the US, speculation that the Fed might announce further quantative easing (QE) had been running red hot prior to the Federal Open Market Committee (FOMC) meeting, and while one was forth-coming, the Fed has explicitly acknowledged that it is "prepared to provide additional accommodation if needed".

ANZ says the scene has been set - and with inflation at a 48 year low and unemployment still stubbornly high, most now feel that it's a case of when, not if, the Fed will take further steps.

It says it's not clear what that next step will be, however it is likely to be some variant of QE, specifically designed to keep long-term interest rates low.

"This will almost certainly have an impact on New Zealand rates, especially at the long end - as speculation of QE already has.

"The bottom line is that although New Zealand rates are already low relative to the economic outlook, global forces will likely take them lower yet."

It says surprisingly weak Q2 GDP data has also rattled nerves, and with the Reserve Bank now comfortable with the OCR lower for longer, it seems there is little holding the rates market back. Short end rates have already moved lower, paring back expectations of rate hikes.

ASB Business Weekly says on the face of it, even a gradual economic recovery seems to be losing what steam it had.

With the latest GDP results it now expects the Reserve Bank to wait until March to lift the OCR.

"That gives another six months to allow the economy to strengthen and better assess the earthquake disruption."

Between now and then two CPI and two inflation expectation results will be released. ASB says on both fronts it expects the Reserve Bank to become less sanguine about its low medium-term inflation outlook.

BNZ Markets Outlook says the weak GDP print has seen the market pricing out any chance of a hike by the years end with only 19 basis points of tightening priced in for March next year.

J P Morgan Weekly Prospects has also changed its call from a December hike to March 2011.

"The disappointing GDP print for the June quarter was the tipping point but the impact of the recent earthquake in Canterbury on near-term activity and the recent drop in inflation expectations also provides scope for the cash rate to be left at current accommodative levels."

Westpac Weekly Commentary says the reluctance of consumers to participate in the recovery was the rationale for the Reserve Bank's more downbeat Monetary Policy Statement in September and at face value the weak growth in consumption would seem to validate this view.

However, it says the strength and weakness in spending is too selective to tell a general story about consumer caution.