VIEW: ASB note that "courtesy of........>

NEW ZEALAND: VIEW: ASB note that "courtesy of higher fuel prices, overall

consumer prices rose 0.6% in the June quarter (+1.7% y/y), in line with the May

Monetary Policy Statement (MPS) pick and the market consensus. Annual readings

from the core inflation measures produced by Statistics NZ fractionally ticked

up, but were clustered around 2%. On the basis of today's CPI data, we still

expect a stable 1.7% yoy print for the RBNZ's estimate of core inflation from

the sectoral factor model (released 3pm today), with risks fractionally tilted

to the upside. We expect volatility in annual CPI inflation readings over the

next few outturns. However, our view is that downside risks to the inflation

outlook have continued to grow, with the RBNZ looking increasingly unlikely to

be able to comfortably meet its inflation and labour market objectives. We

believe the RBNZ will cut the OCR by 25bps in August and November."