### POV: Key Risk Is Dovish Hold: Bank of....>

CANADA: ### POV: Key Risk Is Dovish Hold: Bank of Canada is widely seen holding

rates at 1.50% Wednesday (17/18 in Bloomberg survey; <10% prob priced in), and

that seems the most likely scenario, especially given NAFTA uncertainty. Hawkish

Hold seems to be the consensus.

- Hawkish Risk: Our Policy team cautions not to dismiss a surprise hike at the

Sep meeting given strong macro data. Note that BoC surprised in Sept 2017 by

hiking 25bps to 1.00%, defying consensus. If they did so again this year, it

would be for the second consecutive meeting, as in 2017. 

- Dovish Risk: But the bigger risk could be a dovish hold, with October hike

expectations already high (81% prob of hike priced in; 9 of 11 in BBG survey see

rates at 1.75%). The BOC will want to see further evidence of firming price

pressures and housing sector activity. 

- Key events between now and the Oct 24 meeting include the Q3 BOC Business

Outlook survey, and the prospective Fed hike on Sep 26, as well as ongoing NAFTA

negotiations.