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Desjardins Look For A More Dovish BoC On Wednesday

CANADA

Desjardins look for the BoC to sound more dovish on Wednesday.

  • “It’s clear that the domestic economy is struggling, with commercial banks reporting more borrowers having trouble with loan repayments. Wages also might not be growing as fast as previously believed. New payroll data released this week showed wage growth of just 2.4%, roughly half of the 4% to 5% increase the BoC cited back in January.”
  • “Most importantly, however, central bankers will need to acknowledge the progress made in containing inflation. While underlying inflationary pressures are probably still slightly above target, it’s time to take a more nuanced approach to describing price growth. In doing so, the central bank will begin opening the door ever so slightly to potential rate cuts.”
  • “Our base case is that the BoC will begin lowering rates in June. However, should the upcoming employment readings disappoint or inflation numbers cool off more quickly than we expect, it’s possible that the central bank starts moving as early as April. Because really, what more could they ask for?”

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