VIEW: ASB write: "The RBNZ surprised by........>

RBNZ: VIEW: ASB write: "The RBNZ surprised by keeping the OCR on hold. It

assessed that developments since August had an offsetting impact on the monetary

policy outlook. Yet its growth forecasts have been trimmed and assessment of

capacity constraints in the economy has also been trimmed. But to us, the RBNZ's

new growth outlook still appears too rosy and it will eventually revise them

down - meaning future inflation pressures will take longer to build up.

Moreover, the RBNZ has yet to factor in the economic impact of its impending

bank capital increases, for which we expect a bigger economic impact than the

RBNZ. The RBNZ continued to forecast a low in the OCR of 0.9% (as it did in

August). For these reasons, we continue to expect the OCR will eventually fall

to 0.5%. The most likely timing for cuts is the February and May MPS releases."