VIEW: Goldman Sachs note that "as expected,....>

RBNZ: VIEW: Goldman Sachs note that "as expected, the RBNZ left the cash rate on

hold at 0.25% and maintained the size of its Large Scale Asset Purchase

programme (NZ$60bn). The brief attending statement and Minutes maintained a

clear dovish bias - despite the RBNZ flagging i) "a marginally stronger starting

point for the NZ economy", ii) "improvements in the outlook since the May MPS",

and iii) a "larger than assumed" fiscal stimulus. Key dovish features included

i) the characterization of the risks being skewed to the downside, with RBNZ

staff "working towards ensuring a broader range of monetary policy tools would

be deployable in coming months", ii) some concern about the appreciation of the

NZD, and iii) the omission from the Minutes of the explicit commitment that the

OCR will remain at 0.25% until 1Q2021. The latter all highlight a clearly dovish

bias at the RBNZ overall - even if we don't view today's statement as a major

shift in that bias. In light of today's comments we raise the subjective odds of

further rate cuts slightly in 4Q2020 and 1Q2021, although our base case view

remains that negative rates is still not the most likely scenario."