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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Source: Bank of Canada
Executive Summary
- The BoC is widely but not unanimously expected to cut for a second consecutive meeting this week, taking its overnight rate to 4.5%.
- Recent core inflation trends have reversed the particularly impressive progress seen earlier in the year but remain within the inflation target band.
- The Bank doesn’t have a dual mandate but the continued rise in the unemployment rate should help see a cut this meeting. However, that recent push higher in core inflation could warrant caution ahead.
- We expect a cut this week although feel the 23bp of cuts priced overstates its likelihood.
- We also see the additional half a 25bp cut priced for September at risk of being trimmed with this meeting although it will remain heavily data dependent in the lead up to that decision.
- We can’t rule out Q&A clues on balance sheet policy tweaks considering renewed overnight pressures in the past few days, although the Bank has proven reluctant to shift from the current passive approach.
- CAD net shorts are at historical extremes, potentially limiting scope for dovish reaction.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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