The Bank of Canada (BoC) left interest rate unchanged at 1.75%, as expected. According to National Bank of Canada’s analysts, Krishen Rangasamy and Paul-André Pinsonnault, the central bank turned more cautions amid loss of economic momentum.
Key Quotes:
“The Bank of Canada statement was less hawkish than the one released last October. That was expected in light of the deterioration in the global economic picture and slumping commodity prices. However, the BoC’s statement was silent about market volatility and instead focused on economic fundamentals.”
“It seems the Bank is also less confident about the economic outlook. It indeed added the oil price shock, the evolution of business investment, and the assessment of the output gap (slack) to the list of factors that would determine the pace of policy normalization.”
“The BoC seems to be considering downgrading its 2019 Canadian GDP growth forecast in the upcoming Monetary Policy Report. So, while the central bank did not entirely close the door to a January rate hike, odds of such a hike being delivered have, in our view, dropped in the low 50% (compared to market estimates of more than 80% back in early November).”
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