The rejection of the deal was a huge blow to the markets, Forsyth Barr broker Ken Lister said last night.
"Given the days they took to debate it, we expected it to pass. In the next couple of days, there will be another vote but, so far, markets have reacted with disappointment."
Billions of dollars were wiped from the value of shares around the world but Mr Lister hoped New Zealand would escape the worst of it by having already been through a financial crisis of its own when finance companies started to collapse.
Financial markets were at the heart of the US, United Kingdom and some European markets.
But New Zealand was more export-driven and would be affected by the changing currency and interest rates.
Small cuts in the Reserve Bank's official cash rate (OCR) were not going to make much difference to the increasing cost of credit offshore for New Zealanders.
"Unfortunately, more of a key thing for the economy here is the question mark over the recovery we had picked for next year," Mr Lister said.
The Reserve Bank of Australia (RBA) pumped extra cash into the money market yesterday and prepared to lend more US dollars as risk aversion reached new extremes following the shock rejection of the US bail-out plan.
Such was the turmoil that investors were increasingly betting the central bank would also have to cut official rates as soon as next week, and by an aggressive 0.5%.
Speculation increased yesterday that New Zealand's central bank might bring forward its next cut in rates to as early as next week.
It is due to make an announcement on October 23.
With major banks around the world too scared to lend to each other, the RBA sought to ease some of the strain at home by adding $A1.95 billion ($NZ2.43 billion) in repurchase agreements, above the estimated daily need of $A1.87 billion.
The addition should further expand banks' cash cushion with the RBA, which was already at a record $A10.65 billion on Monday.
Like many central banks, the RBA has been more than generous with liquidity in the past couple of weeks as turmoil in world markets led commercial banks to hoard cash.
The Federal Reserve had led another round of liquidity measures, more than doubling US dollar swap limits with major central banks to $US620 billion.
The RBA's own swap limit with the Fed was trebled to $US30 billion.
An RBA spokesman said it would likely hold a US dollar auction at the end of this week with a lending term around 90 days to help meet banks' cash requirements for year-end.
"In response to continued strains in short-term funding markets, central banks today are announcing further co-ordinated actions to expand significantly the capacity to provide US dollar liquidity," the RBA said in a statement.
"Central banks will continue to work together closely and are prepared to take appropriate steps, as needed, to address funding pressures."
Finance Minister Michael Cullen said the first phase of the Government's personal tax cut package today would deliver tax cuts of between $12 and $28 a week for full-time workers, providing some relief for households hurt by skyrocketing global commodity prices this year.
"I am confident that the Government of the United States will soon reach an agreement to restore more confidence in global credit markets. It is vital to the world economy, and to New Zealand's economic outlook, that that confidence be restored."
