VIEW: Westpac write "with only a few...........>

RBNZ: VIEW: Westpac write "with only a few paragraphs to go on, it is difficult

to discern exactly how serious the RBNZ is about cutting the OCR. The additional

spanner in the works is that a committee will take over the decision making from

1 April, and the committee could chose a different stance. But clearly, the odds

of an OCR reduction this year have increased. We were very surprised by this

change of stance, because the economic situation has not changed much since the

RBNZ's last missive in February. Perhaps the main reason for the change of

stance was the actions of other central banks. The RBNZ said that a weakening

global economic outlook had "prompted central banks to ease their expected

monetary policy stances, placing upward pressure on the New Zealand dollar." In

other words, the RBNZ might have tailored this statement to meet the

expectations of financial markets, who are pricing OCR cuts, thereby avoiding a

lift in the exchange rate. The RBNZ also cited global risks, reduced momentum in

domestic spending, softness in the housing market, weak business investment and

low business confidence - that surprises us, since none of these factors is much

different to the forecasts laid out in the RBNZ's last missive."