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CANADA: BMO Switch To 50bp Cut From BoC Next Week

CANADA
Bank of CanadaGlobalCentral Bank NewsCanadaBulletMarketsFixed Income BulletsForeign Exchange BulletsRegionNorth America

BMO have switched to calling for a 50bp cut from the BoC next week in a “close call”. They join Desjardins and RBC from domestic analysts we have seen looking for the upsized cut. As noted earlier, today's CPI report has seen October cut pricing shift from 38bp to 44bp. 

  • “Sliding energy prices were the big driver here, as core price inflation was largely as expected and essentially stable. Still, the long-awaited drop in headline CPI to below 2% is a watershed moment, which will help calm down inflation expectations.”
  • “While gasoline will likely pop back up in next month's report, some of the hottest components of shelter costs are relenting and will act as an undertow on overall inflation in coming months.”
  • “It's a close call, but we suspect that the big improvement in inflation, the still-high unemployment rate, and the still-sour consumer and business sentiment will be enough to prompt the Bank of Canada to opt for a 50 bp rate cut later this month.”
  • “After all, the BoC has dovishly signalled that they are now more concerned about downside risks to the economy and the possibility that inflation may drop too low.”
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BMO have switched to calling for a 50bp cut from the BoC next week in a “close call”. They join Desjardins and RBC from domestic analysts we have seen looking for the upsized cut. As noted earlier, today's CPI report has seen October cut pricing shift from 38bp to 44bp. 

  • “Sliding energy prices were the big driver here, as core price inflation was largely as expected and essentially stable. Still, the long-awaited drop in headline CPI to below 2% is a watershed moment, which will help calm down inflation expectations.”
  • “While gasoline will likely pop back up in next month's report, some of the hottest components of shelter costs are relenting and will act as an undertow on overall inflation in coming months.”
  • “It's a close call, but we suspect that the big improvement in inflation, the still-high unemployment rate, and the still-sour consumer and business sentiment will be enough to prompt the Bank of Canada to opt for a 50 bp rate cut later this month.”
  • “After all, the BoC has dovishly signalled that they are now more concerned about downside risks to the economy and the possibility that inflation may drop too low.”