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Bank of Canada waiting for government to make the first move

Expectations for Bank of Canada shift are very low

If the Bank of Canada wanted to surprise markets, today would be the day to do it. Expectations for a shift in the 0.50% overnight rate are extremely low. None of the economists in the Bloomberg survey are forecasting a change.

The reason is that the BOC has said it wants to see the Federal government's stimulus budget before it updates forecasts or considers doing more. The budget is due on March 22.

The BOC decision is at 10 am ET. There is no press conference or MPR with this meeting, which is another reason to believe the BOC won't act.

From time to time, the BOC will hint at changes in its forecasts. The most recent forecast was from January when they saw 1.4% growth in 2016 and 2.4% growth in 2017.

One downside risk might be world economic growth, which is forecast at 3.3%.

The key paragraph for the BOC is the last one in the statement. It currently reads :

All things considered, therefore, the risks to the profile for inflation are roughly balanced. Meanwhile, financial vulnerabilities continue to edge higher, as expected. The Bank's Governing Council judges that the current stance of monetary policy is appropriate, and the target for the overnight rate remains at 1/2 per cent.

The main risk I see is that officials are more upbeat due to solid data lately, partly driven by the weak Canadian dollar.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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