VIEW: ANZ write: "In our view, the RBNZ's......>

RBNZ: VIEW: ANZ write: "In our view, the RBNZ's growth forecasts remain too

optimistic, particularly regarding business investment. On our own forecasts the

worst is indeed behind us, but that isn't a sufficient condition to hit the

inflation tgt in the medium term. The RBNZ is not taking in consideration

declines in the availability of credit to the productive sector, which we think

will have a meaningful impact on investment, though the magnitude of the impact

is uncertain. On the other hand, the Bank also revised down its estimate of the

speed limit of the econ, as its capacity suite has not deteriorated as quickly

as GDP growth. This means that they don't "need" forecast growth to be as high

in order to be able to forecast hitting their inflation target over the medium

term. Essentially it cancelled out the downward revision to growth that we

thought would dominate. Whether that is right or wrong will take some time to

become evident, but the assumption matters. Not least, it buys the RBNZ time. We

have therefore taken 1 cut out of our own forecasts, and pushed out the profile.

We continue to exp. 2 further 25bp rate cuts, but now see them occurring in May

& Aug. This would take the OCR to 0.5%. We see downside risk to this endpoint."