VIEW: ASB write "the RBNZ kept the OCR on......>

RBNZ: VIEW: ASB write "the RBNZ kept the OCR on hold in a finely-balanced

decision that firmly points to an imminent rate cut. The RBNZ's assessments of

the various risks (both up and down for interest rates) and discussion of

whether to cut the OCR today all point to one further cut in August, in line

with our exp. A 25bp OCR cut is close to fully priced for August, with a total

of around 50bps of OCR cuts priced by November. The question is whether a 1.25%

OCR will prove to be the floor. There appear to be two main factors that would

drive an even lower OCR. One is further deterioration of the global environment,

particularly through the growth risks from drawn-out trade tensions. The other

would be if the RBNZ materially reassesses its view of how much slack is in the

labour market and concludes there is a lot more than thought - which is the big

change in view driving the RBA to cut interest rates decisively. For now, the

RBNZ still assesses that employment is "broadly at its maximum sustainable

level", implying no view change to date."