Bank of Canada: Forecast From 5 Major Banks

The Bank of Canada (BoC) is expected to leave interest rates unchanged and market waiting for its Rate Statement due out at 15:00 GMT. here are the expectations as forecast by the economists and researchers of eight major banks.

TDS

“We look for the Bank of Canada to leave policy and forward guidance unchanged as Governing Council attempts to balance an improving outlook against a market that is already pricing rate hikes by mid-2022. This should result in a brief policy statement that acknowledges the recovery has outpaced expectations while tying forward guidance back to forecasts from the January MPR.”

CIBC

“The Bank of Canada will leave rates unchanged, citing a huge gap to full employment and sustained (not one-time) inflation pressures, so the focus will be on whether they hint at tapering in bond purchases after April, and how far they go in adjusting their description of the economy given upside surprises in recent data. If that mixed message gets misinterpreted, Deputy Governor Schembri will have the opportunity to correct market perceptions in remarks the following day.”

MUFG

“The BoC is expected to acknowledge the stronger growth outlook at next week’s policy meeting. Growth in Q4 was twice as strong as the BoC had expected. It is encouraging expectations that the BoC will eventually bring forward plans to tighten policy. The BoC will face a difficult challenge if it wants to dampen the pace of the move higher in Canadian yields in the week ahead in light of improving fundamentals. The BoC is likely to reiterate that it does not plan to raise rates until 2023 at the earliest.”

Citibank

“We do not expect any shift in policy or substantial shift in messaging at this week’s BoC meeting that is likely to feature a more optimistic policy statement but still expressing caution over possible downside risks. Our base case is for a C$3 B-per-week asset purchase pace through July, C$2 B from July to October, and C$1 B from October through the end of Q1-2022.”

Capital Economics

“We doubt that the BoC will present a more hawkish tone than in January when it meets on Wednesday, even though the economy has been stronger than expected recently. Instead, we think the Bank will use its policy statement to double down on its commitment to keep its policy rate at 0.25% for a prolonged period, in order to support a full recovery in the labour market and minimise economic scarring.”