VIEW: Kiwibank writes "the focus this week.....>

RBNZ: VIEW: Kiwibank writes "the focus this week is all business, and confidence

is crumbling. Businesses have highlighted weak demand, capacity constraints,

(Govt) policy uncertainty, and poor pricing power as reasons to worry about

profitability, reduce investment intentions, and lower inflation expectations.

All of the above point to growth running at or around 1%, half the current run

rate, and a third of what we need. The deterioration in business intentions

demands a policy response. We will get a monetary policy response, but what we

really need is a fiscal policy response. The Government continues to lie in wait

through fear of breaking fiscal responsibility rules, that have proven

irresponsible. So, we must expect the RBNZ to do more, with diminishing returns.

We now expect the RBNZ to cut to just 0.5%, and we see a good chance the bank

delivers in just one move in November. The risk of another move, as bank capital

requirements bite, to 0.25% is uncomfortably high, and will hurt savers."