Bank of Canada Meeting Preview: Shift to neutral

24/04/2019

The Bank of Canada is expected to leave rates at current levels when it publishes its policy statement and Monetary Policy Report on Wednesday (1400 GMT), after which Governor Stephen Poloz and Senior Deputy Governor Wilkins are scheduled to host a press conference (1515).

The key message from its March meeting was that the economy required more stimulus than previously thought. However, given the mixed picture of the data, it would take time to gauge the persistence of below-potential growth and its impact on the inflation outlook.

Fast forward seven weeks and it seems the bank will continue with its data dependency. Most economists expect the new projections and a change to the forward-looking components of the statement to strike a dovish tone. This means the previous mild tightening bias is expected to change to neutral as slowing domestic and global growth prolong the rate pause, similar to the FOMC. 

Markets have scaled back expectations for a rate cut by year-end following highs above 60% in the middle of last month. They now estimate only about a one-in-seven chance of a cut and will look to the accompanying statement, updated forecasts and Governor Poloz’s tone for guidance.

Here are the numbers to know ahead of the meeting:

FX Outlook 

Technically, we've seen narrow ranges on the intraday charts translate into tightening ranges on the longer run chart and rising pressure for a range break out. This occurred yesterday...

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