VIEW: ANZ suggest that there is.........>

NEW ZEALAND: VIEW: ANZ suggest that there is nothing in today's CPI release "for

the RBNZ to get excited about. Today's print for CPI inflation was in line with

the 0.6% q/q rise incorporated in the RBNZ's May MPS. But petrol prices are

volatile and recent strength will drop out of headline inflation in time.

Non-tradable inflation was also in line with the RBNZ's expectation of 0.3% q/q,

but the tick up in core inflation measures does suggest that the past build-up

in capacity pressure had been effective in seeing underlying prices gradually

rise. That said, the RBNZ is forward-looking, and inflation is a lagging

indicator. Given the deteriorating outlook for global growth and waning domestic

capacity pressures, this print is unlikely to sway the RBNZ from an August cut.

But, at the margin, the tick up in core inflation measures will give the RBNZ

something to think about when providing guidance on further rate cuts beyond

August. We think the domestic growth outlook will outweigh this recent blip in

core inflation, and expect further cuts in August and November will take the OCR

to 1%."