VIEW: ASB estimate that the neutral nominal....>

RBNZ: VIEW: ASB estimate that the neutral nominal "Official Cash Rate (OCR) is

just below 3%, as opposed to around 5% at the start of the decade. New Zealand

neutral interest rates also look to have continued their downward trend. Our

estimates are generally lower than current RBNZ point estimates of the neutral

OCR (around 3.5%), but fall within the RBNZ's 2.5 to 4.5% range. At face value,

this suggests that the current 1.75% OCR may be providing less policy stimulus

than what had previously been assumed by the RBNZ. Subsequent RBNZ tightening,

when it does occur, may also prove to be more gradual and culminate in a

historically low OCR peak. This is consistent with the spirit of our recent

forecasts, where the OCR peaks at 2.75% this cycle. Importantly, our work also

highlights the possibility that the neutral OCR could potentially decline

further from here, albeit at more modest rates of decline. This will have

important implications for savers, borrowers, investors and policymakers."