VIEW: ASB write "we did exp. an OCR cut to.....>

RBNZ: VIEW: ASB write "we did exp. an OCR cut to be delivered. But the RBNZ has

- appropriately - put increasing weight on broad challenges that businesses are

facing as well as the slower & more uncertain global growth outlook. We continue

to expect a follow-up OCR cut in August, to 1.25%, but feel the risks are skewed

to a later move. The RBNZ's current OCR outlook suggests a measured assessment

and heavily data-dependent outlook rather than a sense of urgency. The RBNZ's

latest OCR forecasts, prepared before the OCR cut decision, show only a 50%

chance of a further cut. The OCR outlook is now "more balanced". The RBNZ's

growth forecasts for the first half of '19 look realistic & less vulnerable to

over-optimism. Around our August cut call we see the risks as tilted to a

slightly later move, rather than earlier. But we do have firm conviction that a

further cut will come. We do not see inflation sustaining around the 2% target

mid-point without getting further stimulus. Moreover, employment growth has

slowed, creating a growing risk that the RBNZ may not achieve its maximum

sustainable employment objective. The impact of higher bank capital requirements

will also require an offsetting move downwards in the OCR at some point."