### POV: 10TH CONSEC STEADY ANNC EXPECTED,...>

CANADA: ### POV: 10TH CONSEC STEADY ANNC EXPECTED, MOST CAUTIOUSLY OPTIMISTIC

Bank of Canada will leave target rate steady at 1.75% at its policy annc Wed at

1000ET/1400GMT, accompanied by Monetary Policy Report (MPR) forecast update. MNI

PINCH model assigns 0.8% chance of 25bps cut Wed vs. 5.6% wk ago, and a 9.1%

chance of cut in March. Chances of a cut are currently vacillating between

45%-50% from September to January 2021. All 21 analysts surveyed expect the BoC

to remain on hold Wednesday with approximately half seeing a hold through 2020.

- Base case: As risk tied to global trade cools the BoC will likely remain on

hold through the summer barring any exogenous shocks, or economic slowdown after

downward adjustment to growth forecasts in late 2019.

- Dovish: Unexpected carry-over weakness from late 2019, widening output gap

and/or weaker growth revisions help keep rate cut chances alive with a minority

of dealers expecting a drop to 1.5% in April or June.

- Hawkish: Least likely scenario - a rate hike later this year as the economy

accelerates from the late 2019 slowdown, inflation expectations through the

BoC's upper band.