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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.
EXECUTIVE SUMMARY
- The BoC cut its policy rate another 25bps to 4.25% yesterday as fully priced and mostly expected.
- In a modest extension of July’s dovish shift to put greater focus on excess supply, there is increasing need to guard from the economy and therefore inflation being too slow – that’s consistent with the symmetrical response function to deviations beyond the target band as inflation returns to target.
- However, the Bank wasn’t quite as dovish as some might have hoped for and didn’t overtly guide on the potential for 50bp cuts – there was “strong consensus” for a 25bp cut this week and the Governing Council discussed scenarios where rates were cut 50bps but also left unchanged.
- Future rate cuts are coming, guidance continues to be explicit there, but there was relatively little market reaction as it’s already priced and changes around this path are heavily data dependent.
- Next up, twin Canadian and US jobs reports on Friday where signs of further weakness, especially in the former, could see a swift climb in 50bp cut odds. If that doesn’t happen, we expect a grinding back closer to the 25bp clips that the BoC currently looks fond of maintaining.
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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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