VIEW: ANZ write "the RBNZ employed a...........>

RBNZ: VIEW: ANZ write "the RBNZ employed a considerably more dovish tone around

the outlook. Risks around their most recent projections have moved from

"balanced" to "tilted to the downside". The Committee "agreed that more support

from monetary policy was likely to be necessary." We are bringing forward our

forecast OCR cuts to August & November. The Committee highlighted increasing

downside global risks, while acknowledging that the local data had been mixed.

The RBNZ concluded that "a lower OCR may be needed over time". There was no

urgency for the Reserve Bank to cut the OCR again immediately. The economy has

indeed slowed considerably, but the most forward-looking indicators - and looser

financial conditions - suggest a recovery in the second half of the year. The

global slowdown is real, but the pass-through into the New Zealand economy has

been muted so far - and there are reasons to think commodity prices may continue

to be resilient. The labour market is still tight (though employment fell in

Q1), and inflation is still trending up, albeit too slowly for the Reserve

Bank's liking. All that said, the downside risks are clear. The RBNZ identified

several, and we agree with them"