Canadian Dollar is trading mixed as markets await BoC rate decision. BoC is widely expected to keep policy rate unchanged at 1.75%. At last meeting in April, BoC removed chance of rate hike in the near- to medium- term. The central bank also downgraded GDP growth forecast, and lowered the range of neutral rate.
Economic data released since then showed not special deterioration. Headline CPI accelerated to 2.0% yoy but BoC’s preferred gauges of inflation – trimmed CPI, median CPI and common CPI – either eased or stayed unchanged, giving an average reading of +1.9%, down slightly from March’s +1.97%. Job market grew strongly by 106.5k. GDP contracted -0.1% mom in February but 0.3% mom rebound is expected in March. This would probably translate to an annualized growth of 0.7% qoq in 1Q19.
BoC Governor Stephen Poloz said recently that , “the natural tendency is for interest rates to still go up a bit”. Though, that depends on whether the slowdown is temporary. Though, Poloz is uncertain about the size and timing of the rate hike. Overall, we’re not expecting any drastic change with today’s announcement.
Here are some suggested readings on BoC:
