If Canada’s growth failes to show any convincing sings of a rebound in the second half of 2015, then the risks of Bank of Canada (BOC) rate cuts will increase, Morgan Stanley analysts mentioned in their latest note.
Key points
With slugging growth and lingring slack in the economy, the BOC has enough room to leave some policy accomodation in place.
Given our slugging outlook, we place a subjective 40% probability that the BOC wwill deliver at least one 25 basis point rate cut over the next 12 months.
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