VIEW: ASB expect "overall consumer......>

NEW ZEALAND: VIEW: ASB expect "overall consumer prices to rise 0.2% in the March

quarter, lowering annual CPI inflation to 1.6%. Our forecasts are in a similar

ballpark to those of the RBNZ and, although we are on the cusp of a quarterly

0.3% outturn (+1.7% yoy), risks appear broadly balanced. Abstracting from

seasonal and transitory influences on the inflation process, we expect annual

readings from the core inflation measures produced by Statistics NZ to oscillate

around 2%, with annual inflation from the RBNZ sectoral factor model stuck below

2%. Our view is that downside risks to the inflation outlook have grown in

recent months and the NZ economy looks increasingly unlikely to be able to

generate sufficient economic momentum that will be able to keep inflation

comfortably within the 1-3% CPI inflation band. However, we freely acknowledge

the risk that this may take time to become readily apparent in the NZ inflation

figures. We believe the RBNZ will grow increasingly concerned over the inflation

outlook and will cut the OCR by 50bps over 2019. The exact timing on OCR moves

remains fluid."