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CANADA: BoC Doesn’t Offer Much To Suggest Faster Pace Of Rate Cuts

CANADA
  • USDCAD has declined ~20 pips to 1.3522 on the decision and press conference statements, pushing to session lows but within the week’s range having climbed off lows of 1.3441.
  • 2Y GoC yields are 1.6bp higher since the statements, with the Can-US yield differential up by a similar amount to -64bps to remain at the higher end of the past few months but off the -58bps seen pre-CAD GDP last week.
  • There was little in the decision statement to suggest appetite for a faster pace of rate cuts than the 25bp it has moved at for three meetings now, likely disappointing the 84bp priced prior to end-2024 (but with data still in the driving seat).
  • The decision statement offered a more dovish development though, flagging an increasing need to guard against inflation falling too much.
  • The opening statement kept the summary that it’s “reasonable to expect further cuts in our policy rate” if inflation continues per BoC forecasts.

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