BoC Review - July 2020: Lower For Longer

MNI Point of View:

BOC rates seen being on hold into 2023 after Gov Macklem says it will remain 0.25% until inflation is sustainably around 2% target.

• Macklem also said that QE may be tapered off before rates rise, in line with earlier plan to buy at least CAD5b/wk of federal bonds until recovery is well underway.
• "We will be looking for signs that the recovery is becoming more self-sustaining," Macklem said at press conference. "Logically yes, the recovery being well under way comes before capacity has been fully absorbed, but those of those are some ways off."
• "We continue to think asset purchases will continue at least through the first quarter of 2021, and likely well into next year," RBC senior economist Josh Nye says in note. No rate rise until 2023 or later. - Capital Economics: "Bank signals it will not raise rates until at least 2023."
• "The timing of the first BoC hike could be similar to that for the Fed, in early 2023," CIBC chief economist Avery Shenfeld said. "the phrase "well underway" also suggests that QE will end before the policy rate is hiked.

Click here for the full BoC Reviewor see attached below:

MNI_BOC_Review_July_2020.pdf