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Westpac analysts note that the BoC has sat on the sidelines for almost a year, their policy rate steady at 1.75% since late Oct 2018, having raised it +125bp in the prior fifteen months.

Key Quotes

“The Bank is wary about the global outlook and escalating trade tensions, their latest statement noting they will, “pay particular attention”. But the Bank has made no mention about the possibility of cutting rates, BoC officials taking comfort in rebounding domestic activity.”

“Against that background the BoC has struck a neutral tone noting that, “”¦the current degree of monetary policy stimulus remains appropriate.”

“Markets have got the message loud and clear, pricing in just 14bp in BoC easing to mid-2020, a notable outlier vs peers.”

“The outcome of the federal election (21 Oct) won’t materially alter the outlook though at the margin sentiment could see a bigger lift if the more business-friendly conservative opposition wins.”

“The BoC is anticipating a growth moderation in H2 but activity is likely to hold near trend, leaving the BoC content to maintain a steady policy hand further still into 2020.”