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RBNZ: VIEW: TD Securities wrote the following on Thursday; "We have penciled in
cuts for Aug'19 and Nov'19. Deteriorating fundamentals and a firmer NZD are
catalysts for RBNZ cuts. The RBNZ moved to an easing bias as we exp. yesterday.
While the hard data - recent GDP & CPI outcomes - are more or less on track with
RBNZ forecasts, the RBNZ did note the risks to the forward looking forecasts are
now tilted to the downside. As for the soft data, NZ Manufacturing PMI is at
levels last seen in '12, BNZ Employment & Investment intentions are breaking
lower, GDT auction prices have edged lower & the ANZBO Residential Investment
Outlook has also dropped sharply, suggesting downside risks to construction.
Indeed the Bank noted softer house prices & subdued biz sentiment could dampen
household spending. If offshore fundamentals deteriorate, this will add to the
RBNZ's case to cut. We have not explicitly penciled in a further cut for '20,
but we do see the potential for the RBNZ to cut on higher capital requirements.
What we are more comfortable with is that higher capital requirements imply a
lower neutral cash rate. Assuming an April '20 implementation date, this places
a rate cut in late Q2 or Q3 20 as a possibility."