MNI BRIEF: Canada Commits To Just One Of Three Fiscal Anchors

MNI BRIEF: German Insolvency Rate Slows, 2025 Pickup Expected

MNI BRIEF: Brazil Not Even Close To Fiscal Dominance - David

CORRECTED-MNI BRIEF: Brazil Inflation Rises To 4.87% In Nov

MNI China Daily Summary: Tuesday, December 10

MNI: US REDBOOK: DEC STORE SALES +4.2% V YR AGO MO

US Q3 REV NONFARM PRODUCTIVITY +2.2%; Y/Y +2.0%

US NFIB NOV SMALL BUSINESS INDEX 101.7

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

CANADA: Analysts Growing More Confident With Faster Rate Cut Calls

CANADA
CanadaNorth AmericaBulletGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

Headline CPI returning to the target midpoint sees analysts increasingly confident of large or deep cuts ahead: 

  • BMO: “The weaker headline reading […] will reinforce expectations for the BoC to cut rates further. The question markets are grappling with is whether the next move will be 25 bps or 50 bps. [..N]ext week's GDP figures loom large in the 25 vs 50 debate. Today's figure tilts the scales a touch toward a more aggressive path, but there's still another CPI report before the next meeting.” [BMO had previously seen a steady series of 25bp cuts]
  • CIBC: “[I]nflation remains unthreatening and the BoC should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate. We continue to forecast a further 200bp of interest rate cuts between now and the middle of next year.”
  • Desjardins: “Now that inflation is back to target, it’s time for the BoC to accelerate the pace of rate cuts. We expect central bankers to slash their policy rate by 50 basis points next month in an effort expedite the return to a more neutral setting. The market is still only placing a 50% probability on a non-standard reduction in October, but there’s no reason to wait for December after seeing these numbers. We expect market pricing to move further in the coming days after the Fed is out of the way.”
  • RBC: “Trim services ex-shelter prices (sometimes called BoC supercore) rose 0.2% month-over-month by our count, with the 3-month average annualized growth rate slowing to 2.5% in August from 3.0% in July. […] We continue to expect a gradual rate cutting path (25 bps per meeting) down to a 3% overnight rate with risks tilted to potentially larger cuts if the economy softens significantly further.”
  • TD: “We calculate that the current policy rate is still nearly 200 bps above where it should be based on the current state of the economy. And that is after 75 bps in cuts over the last few months. No wonder odds of larger 50 basis point cuts are growing in futures markets. Over the next few weeks, we will be getting a number of BoC members speaking on the economy. This will provide the central bank plenty of opportunity to move market pricing towards its intended path.”
379 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.

Headline CPI returning to the target midpoint sees analysts increasingly confident of large or deep cuts ahead: 

  • BMO: “The weaker headline reading […] will reinforce expectations for the BoC to cut rates further. The question markets are grappling with is whether the next move will be 25 bps or 50 bps. [..N]ext week's GDP figures loom large in the 25 vs 50 debate. Today's figure tilts the scales a touch toward a more aggressive path, but there's still another CPI report before the next meeting.” [BMO had previously seen a steady series of 25bp cuts]
  • CIBC: “[I]nflation remains unthreatening and the BoC should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate. We continue to forecast a further 200bp of interest rate cuts between now and the middle of next year.”
  • Desjardins: “Now that inflation is back to target, it’s time for the BoC to accelerate the pace of rate cuts. We expect central bankers to slash their policy rate by 50 basis points next month in an effort expedite the return to a more neutral setting. The market is still only placing a 50% probability on a non-standard reduction in October, but there’s no reason to wait for December after seeing these numbers. We expect market pricing to move further in the coming days after the Fed is out of the way.”
  • RBC: “Trim services ex-shelter prices (sometimes called BoC supercore) rose 0.2% month-over-month by our count, with the 3-month average annualized growth rate slowing to 2.5% in August from 3.0% in July. […] We continue to expect a gradual rate cutting path (25 bps per meeting) down to a 3% overnight rate with risks tilted to potentially larger cuts if the economy softens significantly further.”
  • TD: “We calculate that the current policy rate is still nearly 200 bps above where it should be based on the current state of the economy. And that is after 75 bps in cuts over the last few months. No wonder odds of larger 50 basis point cuts are growing in futures markets. Over the next few weeks, we will be getting a number of BoC members speaking on the economy. This will provide the central bank plenty of opportunity to move market pricing towards its intended path.”