MNI BoC Review, Apr'24: Door Open To A June Cut

EXECUTIVE SUMMARY

• The BoC left its overnight policy rate at 5% but the broad suite of communications were dovish.
• It has greater confidence that inflation will continue to come down gradually even as economic activity strengthens. Further, it is seeing what it needs to see, but just needs to see it for longer.
• A June cut is “within the realm of possibilities”, tallying with the majority of analyst expectations.
• However, stronger than expected US CPI inflation dominated market reaction on the day and has lowered odds of a first cut in June.
• The less than 65bp of cuts priced for 2024 is at odds with some analysts looking for 100bp of cuts.
• The potential for a greater decoupling in monetary policy between Canada the US is likely to be the main story over the next almost two months before the June 5 decision.
• Next up, Tuesday’s important session with both Canadian CPI and the federal government Budget.

PLEASE FIND THE FULL REPORT HERE:

BOCReviewApr2024.pdf