VIEW: Westpac note that "the next OCR..........>

RBNZ: VIEW: Westpac note that "the next OCR decision is in Feb & once again the

outcome will depend on the data. Given the RBNZ's current 50/50 stance, it would

take a downside surprise of some kind to prompt a cut. We suspect that such a

downside surprise could occur on the international front - our view is that

global econ sentiment will deteriorate early next year as a slowdown in the US

econ becomes more apparent. We are forecasting a cut to 0.75% in Feb. Secondly,

the RBNZ has not yet incorporated its proposal for higher bank cap requirements

into its monpol projections. The final decision on bank cap requirements will be

announced in early Dec, and so it must form part of the MPC's thinking in Feb.

By that point the RBNZ will know more about how interest rates are actually

going to respond to the cap requirements. The key vulnerability to our Feb call

is the housing mkt, which is currently picking up on low interest rates & the

cancellation of plans to implement a cap gains tax. The RBNZ presumably thinks

that this will fizzle, because its house price inflation forecast for '20 is

just 3.5%, our f'cast is 7.4%. If there is sufficient heat in the housing mkt as

early as Feb, the RBNZ may keep the OCR on hold."