The latest Reuters poll of nearly 40 economists showed on Friday, they remain split on the Bank of Canada’s (BOC) monetary policy move. However, they believe the odds of a cut by year-end have increased dramatically.
Key Findings:
“While that suggests the BOC is unlikely to diverge from major central banks’ easing bias for long, an Aug. 23-28 poll of nearly 40 economists showed the central bank would keep its benchmark rate unchanged at 1.75% at its Sept 4 meeting.
A majority of economists, 22 of 39, also predicted no change to BOC rates in the fourth quarter of this year, either.
The remaining 44% of economists predicted, however, the bank would cut rates in the fourth quarter, including two who saw a 50-basis-point cut.
That is a significant shift in expectations from a poll taken ahead of the BOC’s July meeting, where only 15%, or five of 33 respondents, predicted any cut this year.
The poll showed the BOC will cut rates by 25 basis points to 1.50% in the first quarter next year and keep them on hold after that through end-2020 at least. That compared with 1.75% through next year predicted in the previous poll.
There is now a 60% chance of a cut by end-2019, according to the median probability of a smaller sample, 23 respondents who answered an additional question. That is a significant increase from 35% in the July poll.
That probability jumped to 80% for a BOC rate cut by the end of next year, compared with 45% given previously.”
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