The September meeting offered one of the more straightforward Bank of Canada (BoC) decisions in recent times, but Wednesday’s decision is anything but. Having already cut in 25bp increments at three consecutive meetings since June, markets are firmly tilted towards an upsized 50bp cut with circa 45bp priced.
A majority of analysts also opt for a 50bp cut, with many revising prior 25bp calls after the latest CPI release followed dovish business and consumer surveys. On balance, we don’t see inflation and labor market developments since the last BoC meeting as being notably different from its forecast. Growth has underwhelmed though, although the meeting unfortunately comes before GDP tracking that could offer a better sense of a rebound after disruption from strike activity. With Bank commentary in recent months detailing two-sided risk around its expectations of a steady easing cycle, including an explicit openness to 50bp cuts if necessary, lacklustre growth is the main catalyst for such a move.