VIEW: Westpac write that for March......>

NEW ZEALAND: VIEW: Westpac write that for March quarter CPI "we are exp. a

subdued 0.2% rise for the quarter, which would take the annual inflation rate

down from 1.9% to 1.6%. The exp. slowdown is entirely due to the recent pullback

in fuel prices. We exp. the various 'core' inflation measures to hold steady at

close to, but just below, the 2% midpoint of the RBNZ's target range. The CPI

report comes at a time when the outlook for monetary policy is delicately

poised. Following the RBNZ's change of tone in the March OCR review, we shifted

our call to expecting further cuts in the OCR, with the first coming as early as

the May Monetary Policy Statement. But we emphasised that the timing of a move

was highly uncertain, and would be subject to upcoming local data releases and

overseas developments. Our CPI forecast is in line with what the RBNZ exp. in

its February Monetary Policy Statement. If the March quarter prints in line with

exp. or lower, it's likely that we'll see inflation remain below 2% for the

remainder of this year. That in itself wouldn't warrant an OCR cut, but it

wouldn't stand in the way of it either. However, if annual inflation prints at

1.8% or higher, a May OCR cut would become more difficult to envisage."