22 Jan 2015
BoC is likely to cut again in the near future - Nomura
FXStreet (Bali) - According to Charles St-Arnaud, Economist at Nomura, BoC is likely to cut again in the near future, which could be as early as the March unless oil prices rebound.
Key Quotes
"Today’s action by the BoC suggests that the central bank decided to be proactive in the face of the negative shock rather than being reactive and waiting to see the impact in the data."
"Moreover, as we have highlighted before, the speed and the magnitude of the oil price decline makes the impact on the economy very hard to quantify given that we are likely in non-linear territory."
"We believe that the BoC would not have ended its longer period of rates stability unless it believed that there were threats that inflation could fall below the target for a long period of time."
"Nevertheless, as we highlighted above, the forecast seems to have been based on some optimistic assumptions (price of oil and a quick recovery)."
"As such, we see downside risks to the BoC forecast. With this in mind, we believe the BoC is likely to cut again in the near future, could be as early as the March meeting, unless oil prices rebound."
Key Quotes
"Today’s action by the BoC suggests that the central bank decided to be proactive in the face of the negative shock rather than being reactive and waiting to see the impact in the data."
"Moreover, as we have highlighted before, the speed and the magnitude of the oil price decline makes the impact on the economy very hard to quantify given that we are likely in non-linear territory."
"We believe that the BoC would not have ended its longer period of rates stability unless it believed that there were threats that inflation could fall below the target for a long period of time."
"Nevertheless, as we highlighted above, the forecast seems to have been based on some optimistic assumptions (price of oil and a quick recovery)."
"As such, we see downside risks to the BoC forecast. With this in mind, we believe the BoC is likely to cut again in the near future, could be as early as the March meeting, unless oil prices rebound."