BoC Preview: Major Banks expecting BoC to maintain status quo on rates

Today, we have an important BoC meeting and as we head towards the decision timings, here are the expectations as forecasted by the economists and researchers of major banks for the upcoming meet.

Most of the banks expect that the BoC will leave the overnight rate unchanged, and suggest that the attention will be on its future course of action.

TDS

“We expect the BoC will leave the overnight rate unchanged, which is in line with market expectations. The communique should be fairly short, and while the Bank will note that weaker commodity prices present a headwind to the outlook, we expect that they will again warn that higher interest rates will be needed.”

“The biggest question mark will be around the Bank's treatment of the energy shock. Lower oil prices will materially suppress Q4 growth, and even if the impact is expected to be transitory markets will be looking for reassurance that a January rate hike is still a realistic possibility. If the Governor sounds overly concerned about falling oil prices, there is a risk that rates markets could rally sharply.”

Rabobank

“We expect the BoC to leave the policy rate unchanged at 1.75%. CAD OIS implies almost no chance of a hike and so does the Bloomberg analyst survey.”

“We still expect the Bank to raise rates 25bp in January and CAD OIS points to a 60% chance. We see risk of another 25bp hike in April but don’t expect further tightening beyond then.”

“We remain particularly concerned about the outlook for household consumption but we also expect business investment and trade to remain lacklustre.”