10 Jul 2015
BoC seen lowering rates next week – TDS
FXStreet (Edinburgh) - In the view of strategists at TD Securities, the BoC could cut its benchmark rate further at its meeting next week.
Key Quotes
“We are off the market consensus in expecting that the Bank of Canada will cut its overnight rate by 25bps to 0.50% on July 15th”.
“A larger and longer than anticipated hit to the economy from lower oil prices is expected to materially widen the output gap and place downwards pressure on underlying inflation”.
“Positive growth offsets have yet to emerge and the outlook for the second half of the year remains murky. It is difficult to envision a scenario where growth expectations can be lifted to make up for the weakness already observed”.
“We expect the accompanying MPR and press conference to help the market to price in about a 20% chance of a further rate cut based on this message, with the risks skewed to a message that supports more rather than less pricing of a further cut”.
Key Quotes
“We are off the market consensus in expecting that the Bank of Canada will cut its overnight rate by 25bps to 0.50% on July 15th”.
“A larger and longer than anticipated hit to the economy from lower oil prices is expected to materially widen the output gap and place downwards pressure on underlying inflation”.
“Positive growth offsets have yet to emerge and the outlook for the second half of the year remains murky. It is difficult to envision a scenario where growth expectations can be lifted to make up for the weakness already observed”.
“We expect the accompanying MPR and press conference to help the market to price in about a 20% chance of a further rate cut based on this message, with the risks skewed to a message that supports more rather than less pricing of a further cut”.