FXC - Bank of Canada Sticks To Cautious Approach
2024-03-06 13:05:00 ET
Summary
- The BoC has left its policy statement almost unchanged compared to January, defying some expectations that easing references would have been introduced today.
- This suggests a fairly low chance of a rate cut in April, even though June remains on the table, in our view.
- We expect USD/CAD to stay rangebound in the short term before a USD decline emerges.
By James Knightley & Francesco Pesole
April cut not likely, June still possible
The Bank of Canada has left its policy rate unchanged at 5% as expected. The accompanying statement acknowledges that fourth quarter GDP grew more than expected, but recognises that there is more labour market slack emerging, due to rapid population increases, and this should help to dampen wage pressures. Nonetheless, they remain concerned about inflation with BoC Governor Tiff Macklem stating that “future progress on inflation is expected to be gradual and uneven, and upside risks to inflation remain. [The] Governing Council needs to see further and sustained easing in core inflation”. Given this backdrop “It’s still too early to consider lowering the policy interest rate”....
Bank of Canada Sticks To Cautious Approach