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CANADA: CIBC Look For Faster Rate Cuts From BoC and Fed

CANADA
CanadaNorth AmericaBulletGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets
  • CIBC Economics look for the BoC to cut 25bp in October before consecutive 50bp cuts in Dec and Jan.
  • “Thereafter, the Bank no longer pauses, delivers traditional sized cuts, and finishes the cycle at 2.25%, half a year earlier than previously expected” before “a very long pause”.
  • It’s in conjunction with Fed cutting 25bp next week before 50bp cuts in Nov and Dec and then “a move back to 25s until a resting spot of 3.375% is reach by Q2-25”.
  • “Compared to our prior rates forecasts, end of ’24 and end ’25 levels across the curve are lower between 35.0bps (2s) and 5bps (30s). We see an opportunity for GoC 2yrs to beat the forwards in the early part of 2025.”
  • “The most important aspect of these changes in the policy forecast for the FICC Strategy market view is that implied policy divergence has now reached its peak level. Using the upper-end of the FOMC range, the BoC is seen reaching 125.0bps below, the same level it is today, for most of ’25 and ‘26.”
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  • CIBC Economics look for the BoC to cut 25bp in October before consecutive 50bp cuts in Dec and Jan.
  • “Thereafter, the Bank no longer pauses, delivers traditional sized cuts, and finishes the cycle at 2.25%, half a year earlier than previously expected” before “a very long pause”.
  • It’s in conjunction with Fed cutting 25bp next week before 50bp cuts in Nov and Dec and then “a move back to 25s until a resting spot of 3.375% is reach by Q2-25”.
  • “Compared to our prior rates forecasts, end of ’24 and end ’25 levels across the curve are lower between 35.0bps (2s) and 5bps (30s). We see an opportunity for GoC 2yrs to beat the forwards in the early part of 2025.”
  • “The most important aspect of these changes in the policy forecast for the FICC Strategy market view is that implied policy divergence has now reached its peak level. Using the upper-end of the FOMC range, the BoC is seen reaching 125.0bps below, the same level it is today, for most of ’25 and ‘26.”