Bank of Canada rate decision one of the......>

CANADA: Bank of Canada rate decision one of the highlights of the week. Analysts

at RBC write that they expect the BoC to keep rates unchanged at 1.25%. The

board have emphasised headwinds facing the economy, including ongoing NAFTA

negotiations, the response of highly indebted consumer to higher interest rates

and the evolution of the housing market following more stringent mortgage

stress-testing requirements. These have prompted the BoC to note that the policy

rate should rise over time, but with some degree of accommodation remaining

(i.e. policy rate below the 2.5-3.5% estimated neutral rate). Consistent with

this - and a firmer growth profile in the rest of 2018 - RBC anticipate the next

hike from the BoC to come in July, which is discounted with ~50% probability.

For March GDP (Thurs), RBC forecast GDP growth of 1.8% annualised in Q1.