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BOC: Comfortable Majority Looks for 50bps Cut This Week

BOC
Bank of CanadaGlobalCentral Bank NewsCanadaBulletMarketsFixed Income BulletsForeign Exchange BulletsRegionNorth America

The comfortable majority of analysts look for a 50bps rate cut from the Bank of Canada at this week's decision, however a not insignificant minority see a smaller step of 25bps on Wednesday.

  • The BoC is mostly priced to ramp up its easing pace with a 50bp cut on Wednesday after three consecutive 25bp cuts having started cutting in June
  • We think it’s a closer call with another 25bp cut than the 45bp priced implies, but narrowly go with a 50bp cut this month with the market presenting an opportunity to step rates closer to higher estimates of neutral and trim elevated real rates
  • If the Governing Council does opt for a 50bp cut, we expect an attempt at downplaying odds of a second 50bp cut in December to avoid an overly large FI rally and CAD depreciation.

Our full preview including exclusive policy analysis and summary of sell-side views here: https://mni.marketnews.com/3BTzNPh

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The comfortable majority of analysts look for a 50bps rate cut from the Bank of Canada at this week's decision, however a not insignificant minority see a smaller step of 25bps on Wednesday.

  • The BoC is mostly priced to ramp up its easing pace with a 50bp cut on Wednesday after three consecutive 25bp cuts having started cutting in June
  • We think it’s a closer call with another 25bp cut than the 45bp priced implies, but narrowly go with a 50bp cut this month with the market presenting an opportunity to step rates closer to higher estimates of neutral and trim elevated real rates
  • If the Governing Council does opt for a 50bp cut, we expect an attempt at downplaying odds of a second 50bp cut in December to avoid an overly large FI rally and CAD depreciation.

Our full preview including exclusive policy analysis and summary of sell-side views here: https://mni.marketnews.com/3BTzNPh