VIEW: Westpac write "the Reserve Bank kept.....>

RBNZ: VIEW: Westpac write "the Reserve Bank kept the OCR on hold at 1.50%.

However, the RBNZ seems to have ramped up the likelihood that the OCR will be

reduced further. While the media release noted only that "a lower OCR may be

needed", the record of the Monetary Policy Committee's meetings showed that "The

members agreed that more support from monetary policy was likely to be

necessary." The detail of the press release and the record of meetings show

growing concern about global conditions. The RBNZ's view is that "The weaker

global economy is affecting New Zealand through a range of trade, financial, and

confidence channels." The RBNZ was more circumspect about developments in the

domestic economy. The softer housing market and the increase in government

spending in the Budget were seen as offsetting factors. Given the tone of this

statement from the RBNZ, we remain of the view that the RBNZ will most likely

cut the OCR in August. The repeated comment that a lower OCR may be needed is

blunter than the language used in March, which was followed by a cut in May."