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Andrew Kelvin, Chief Canada Strategist at TD Securities (TDS) offered a brief preview of the upcoming Bank of Canada monetary policy decision on Wednesday, wherein the central bank is expected to cut interest rates by 25 bps.

Key quotes:

“With other G7 central banks making unspecified promises of support, financial markets are now fully primed for widespread monetary stimulus. In Canada’s case, markets have now fully priced in a rate cut for March, and with recent developments we believe that the cost of disappointing the market would be unpalatably high for the BoC. Although their preference may be to wait until they have a full forecast in hand to act, we now believe that the BoC will cut rates by 25 bps at tomorrow’s meeting.”

“We don’t expect to see much in the way of forward guidance given the volatile backdrop. Data dependence will remain the bank’s lodestar going forward, as they will tie the March rate cut to expected reductions in global growth. We also expect they will cut by 25 bps in April, but the Bank won’t want to signal anything until they have a better sense of COVID-19’s growth implications and potential fiscal measures.”