BoC Preview: Forecasts From Four Major Banks

Markets are looking forward to Wednesday’s decision on interest rates by Bank of Canada, and it is widely expected that the Bank of Canada will leave the interest rate unchanged (0.25%). reduce weekly asset purchases to $2 billion

Here are the expectations as forecast by the economists and researchers of Four major banks

TDS

“The outlook looks bright, but growth is likely to fall short of the BoC’s lofty forecast from April. We don’t expect any change in forward guidance, with the BoC still signaling that it expects economic slack to be fully absorbed (and rate hikes to occur) in 2022H2. We also look for another taper, from $3bn to $2bn per week in GoC purchases.”

CIBC

“We don’t expect to see any market waves arising from the BoC’s announcement or Governor Macklem’s remarks, even with a further tapering of bond purchases likely to be unveiled. If it uses this meeting to pare back purchases by a further $1bn per week as seems likely, the spin will be that this is nothing more than a continuation of the path it was already on.”

Citibank

“We expect another taper in asset purchases at this week’s meeting, with the weekly pace reduced from $3bn per week to $2bn. In the team’s base case, the pace is slowed further to C$1bn at the October meeting, with a December meeting announcement to reach net-zero by the end of 2021. However, markets have already come to expect a hawkish BoC and are currently pricing substantial rate hikes in 2022 and a ‘neutral’ statement could be a somewhat dovish surprise.”

MUFG

“The BoC is expected to deliver multiple rate hikes from next year. There is no reason to expect the BoC to alter their rate guidance for hikes from 2H 2022 at Friday’s policy meeting. We do though expect the BoC to announce taper in the weekly pace of QE to $2bn.”