Today, we have an all-important Bank of Canada (BOE) interest rate decision and as we head closer to the decision timings, here are the expectations as forecasted by the economists and researchers of major banks for the upcoming policy-setting meeting.
With continued global trade tensions, the Bank of Canada is likely to hold rates unchanged at 1.75% and most analysts think that the bank will not be able to raise rates again this cycle.
TD Securities
“We look for the BoC to hold rates unchanged at 1.75% as they largely reiterate their message from April in a short statement.”
“We expect the Bank to remain cautious on trade tensions as they await more clarity on US/China relations and reiterate that the economy is unfolding in line with their forecast from April. That said, the Governor’s recent media comments on the labour market tilts the balance of risks to a more constructive tone.”
Danske Bank
“The Bank of Canada (BoC) is widely expected to leave policy rates unchanged at today’s interim monetary policy meeting. At the previous meeting, the central bank removed its modest tightening bias and focus today will be on any new policy signals.”
“We do not expect any significant news and see the potential for a moderately stronger CAD on an ‘on-hold’ announcement.”
National Bank Financial
“Today, the Bank of Canada will hold a monetary policy meeting. Uncertainties regarding the global economic outlook are not easing. While it is true that tariffs on Canadian steel and aluminum exports to the US have been eliminated, trade tension between the US and China have taken a turn to the worst recently. Meanwhile, inflation is not a threat, with core measures near the BoC’s midpoint of its target range Consequently, we expect the Bank of Canada to stay put and reiterate that an accommodative policy interest rate continues to be warranted.”
“Although no press conference is scheduled following the announcement, a speech set to be delivered by Deputy Governor Carolyn Wilkins on Thursday should provide some valuable insight.”
Royal Bank of Canada
“The Bank of Canada is not expected to make any substantive changes in Wednesday’s policy decision. Certainly not to the level of interest rates but also to the guidance – or lack there-of – on the likelihood of any future moves after the April decision dropped any explicit reference to the need for future hikes.”
Rabobank
“We expect the Bank of Canada to leave the policy rate unchanged at 1.75% on 29th May. This is unanimously expected by the 21 analysts surveyed by Bloomberg (including ourselves) and CAD OIS implies almost no chance of a move in either direction at the May meeting.”
“CAD OIS currently points to around a 40% chance of a cut by year-end.”
“Although a more cautious tone has been adopted by the Bank, the door was left open for rate hikes. Rather than being dovish, we argue that the Bank has adopted a holding stance.”
“We maintain the view that the BoC will not be able to raise rates again this cycle and instead we see the Bank cutting rates in 2020 Q2.”
ING
“We see a strong labour market and better news on the way for the housing market – likely in the post-2Q19 period. And globally, recent optimism that a new NAFTA agreement could be ratified by the end of summer along with our trade team’s view that a US-China trade deal could be struck by the third quarter suggests the first quarter will be a low point for 2019.”
“In turn, this should keep the Bank of Canada on hold at 1.75%, despite other dollar-bloc central banks talking of (or actively) cutting rates.”
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