Next week, the main event in Canada will be the central bank’s meetings. According to National Bank of Canada analysts, the Bank of Canada will keep rates unchanged and negative rates are not on their plans.
Key Quotes:
“The highlight of the week will be the Bank of Canada’s monetary policy meeting and Monetary Policy Report. In his most recent comments, Governor Tiff Macklem indicated the Monetary Policy Report would probably provide a central planning scenario for output and inflation and a discussion of the related risks, something that was missing in the previous MPR.”
“Taking rates into negative territory does not seem to be in the plans of the central bank, and we therefore believe rates will remain unchanged this week. We don’t expect any change to the asset purchase program either, with the Bank likely to reaffirm that large scale asset purchases will continue “until the economic recovery is well underway”. At some point in the future as the economic outlook become clearer, Macklem and the Bank will need to provide more guidance on the policy rate. We expect this to come in the form of explicit forward guidance, likely in the fall.”
“Manufacturing sales could have rebounded 9.0% in May judging from previously-reported data on factory goods exports. We’ll also keep an eye on the release of June’s existing home sales and May’s wholesale trade sales.”
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