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RBNZ: VIEW: Kiwibank note that "under our baseline assumptions the RBNZ will
keep the cash rate unchanged well into 2022, as the local and global economy
takes time to heel, and eventually recover. The risks to our assumptions are
simply to the downside. The downward skew in risks will keep our policymakers on
the front foot. The ~$18b in unallocated Government recovery funds will be
allocated. And the RBNZ has plenty of work left to do, with both inflation and
employment mandates unmet. The $60b LSAP program will run out in May 2021.
Stopping the LSAP program will cause an effective tightening in monetary
conditions. Tightening policy is a discussion for another year, perhaps 2022,
maybe 2023. The LSAP program will be extended, and doubled into 2022, in our
view. If the RBNZ wants to drive retail lending and deposit rates lower, a term
lending facility to the banks would have immediate effect. Term lending
facilities have worked offshore, and would work in slashing retail rates in NZ.
We believe the introduction of a term lending facility is probable."