BoC to likely leave rates on hold next week - Westpac

BoC likely leaves rates on hold next week but would not be surprised at all if they deliver a hike, according to Richard Franulovich, Research Analysts at Westpac.

Key Quotes

“Officials have long argued their intentions very clearly - insurance easings of 2015 have overstayed their welcome and the data since their 12 July hike has continued to portray resilience and firming inflation.”

“Absent a hike, their statement is in any case likely to lean hawkishly and see expectations for an Oct 25 hike firm.”

“CAD vulnerable to a pullback in the event the BoC does not hike next week but it’s likely to be short-lived with a clear signal for an Oct hike limiting CAD downside.”

“Next major multi-month move in CAD will be dictated by BoC rate hike potential beyond the unwinding in 50bp in insurance easings from 2015, officials likely to deliver some clarity on that front in Q4.”