VIEW: ANZ note that "Wednesday's Review has....>

RBNZ: VIEW: ANZ note that "Wednesday's Review has strongly reaffirmed our view

that the RBNZ's LSAP will increase to $90bn in August, consistent with our

downbeat econ forecasts. However, given the forthright tone of the Review, which

flagged a willingness to ease policy further & to be ready to deploy additional

unconventional MonPol tools, we also now expect the following:

- A shift in the pace & composition of LSAP purchases, with an emphasis on

containing the recent steepening of the NZGB curve. We exp. that to occur before

Aug - with the 1st step possibly as soon as today. Within the NZ$90bn limit that

we exp., we think NZGBs will remain the 1st choice for purchases, but other

assets will need to be added in time, given the small size of the domestic bond

market. We expect the RBNZ to clarify its criteria when the time comes in Aug.

As things stand, foreign assets would be the next choice in our view.

- A new indemnity to be agreed with the FinMin that extends the timeframe of the

existing indemnity & widens the range of assets the RBNZ can purchase within its

LSAP to incl. foreign assets & other highly rated domestic private sector bonds.

- We can't rule out OCR cuts (potentially into negative territory) next year."