VIEW: TD Securities note that "the RBNZ........>

RBNZ: VIEW: TD Securities note that "the RBNZ provided a strong signal that its

LSAP is likely to be upsized at next month's meeting. We assume the PREFU is

announced after next month's RBNZ meeting and that the QE program is extended to

Aug'21. However the size of the program is contingent on a number of variables:

If purchases are capped at 50% of outstandings across NZGBs, Linkers & LGFAs,

this would imply a LSAP of NZ$78b. If the PREFU is published before next month's

RBNZ Meeting, this would be a strong signal that government spending is likely

to have stepped up. This would mean increased NZGB issuance, in turn providing

scope to upsize the LSAP > NZ$78b. If there is no change in the supply outlook,

and the LSAP is > NZ$78b with an Aug'21 expiry, then this would imply the Bank

is setting aside funds to purchase offshore assets to weaken the NZD. If the

LSAP exceeds the projections without any increase in supply, this would point to

the RBNZ's intention to purchase foreign assets. At a LSAP for ~A$80b, we may be

on the conservative side of estimates. That said the risks to our forecast are

for a larger LSAP and there are other options the RBNZ has in its unconventional

toolkit to lower the cost of funding."