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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."