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16 Jul 2015
BoC to stay its hand on rate-hike until mid-2017 - TDS
FXStreet (Mumbai) - Analysts at TD Securities present a review of Bank of Canada’s (BOC) monetary and cite key implications from the BOC Monetary Policy Report.
Key Quotes:
“In a highly anticipated decision, the Bank of Canada lowered the overnight rate by 25 basis points today, to 0.50%. That is the second rate cut this year, after the Bank surprised markets back in January with its first 25-basis point cut.”
‘The Bank cited a considerably lower outlook for Canadian growth which has increased the downside risks to inflation.’
“The Bank has penciled in a 0.5% contraction for Q2 (not far from our tracking of -1.0% annualized) this marks two quarterly declines in GDP.”
“Although they anticipate a rebound in Q3 and beyond, their forward looking language was quite dovish, emphasizing the downside risks to inflation and the "significant and complex adjustment" that Canada's economy is undergoing. “
“This raises the risk monetary stimulus, depending on how the economy progresses.”
“An interest rate cut was not fully priced in by markets, and Government of Canada bond yields have fallen since the announcement and the Canadian dollar has weakened to a new low of roughly 77 U.S. cents.”
“Looking ahead, the weak economic performance in 2015 has pushed back our expectations for any future hiking cycle. We now expect the Bank of Canada to stay its hand on this front until mid-2017.”
Key Quotes:
“In a highly anticipated decision, the Bank of Canada lowered the overnight rate by 25 basis points today, to 0.50%. That is the second rate cut this year, after the Bank surprised markets back in January with its first 25-basis point cut.”
‘The Bank cited a considerably lower outlook for Canadian growth which has increased the downside risks to inflation.’
“The Bank has penciled in a 0.5% contraction for Q2 (not far from our tracking of -1.0% annualized) this marks two quarterly declines in GDP.”
“Although they anticipate a rebound in Q3 and beyond, their forward looking language was quite dovish, emphasizing the downside risks to inflation and the "significant and complex adjustment" that Canada's economy is undergoing. “
“This raises the risk monetary stimulus, depending on how the economy progresses.”
“An interest rate cut was not fully priced in by markets, and Government of Canada bond yields have fallen since the announcement and the Canadian dollar has weakened to a new low of roughly 77 U.S. cents.”
“Looking ahead, the weak economic performance in 2015 has pushed back our expectations for any future hiking cycle. We now expect the Bank of Canada to stay its hand on this front until mid-2017.”