VIEW: BNP Paribas write "RBNZ cut rates to.....>

RBNZ: VIEW: BNP Paribas write "RBNZ cut rates to 1.5% as we expected, citing a

subdued employment and inflation outlook with heightened downside risks to the

global and domestic economy. In terms of the outlook, the OCR projection shows a

drop to an average of 1.35% by Q1 2020, effectively leaving the door open for a

further cut depending on how the risks evolve but with no clear signal as to an

imminent follow up easing. This was highlighted by the statement that lowering

the OCR today "provides a more balanced outlook for interest rates". GDP

forecast was revised down to 2.6% for both 2019 and 2020 from 2.9% and 2.8%

previously. Headline CPI is expected at 1.6% end 2019 and 1.8% end 2020 from

1.4% and 2.0% previously. Interestingly, the RBNZ specifically flagged a key

downside risk to their growth projections as a larger than anticipated slowdown

"particularly in China and Ausrtalia". Perhaps, like us, they also think the

RBA's forecasts yesterday look far too optimistic."