VIEW: Westpac write "the statement was bang....>

RBNZ: VIEW: Westpac write "the statement was bang in line with our expectations.

The press release consisted of a justification for cutting the OCR - low

inflation, slowing domestic economy, and global risks. There was nothing at all

in the press release to indicate what the RBNZ is thinking about future OCR

moves. The RBNZ forecasts the OCR to drop to 1.4% by March 2020 - this is

roughly equivalent to half a further cut. This allows for the possibility of

further OCR cuts, but does not commit the RBNZ. Our interpretation is that the

RBNZ is genuinely open minded about whether to cut the OCR again or not. We

judge the probability of a follow-up OCR cut in June as low. August is more of a

live possibility, but our current forecast is that the RBNZ will keep the OCR on

hold at 1.5% until mid-2020, when it will reduce the OCR again. The OCR cut

caused two year swap rates to fall 15 basis points and the exchange rate to fall

0.7 cents. Mortgage rates have plunged over the past two months, and today's OCR

cut will cause them to fall further. We think the consequence will be an upturn

in the housing market, starting in the second half of 2019."