BOC: Holds Rate At 2.75%, Cautious And Less Forward Looking Amid Trade War
Apr-16 13:45
- Bank of Canada holds benchmark interest rate at 2.75% after seven prior consecutive cuts.
- "Governing Council will proceed carefully, with particular attention to the risks. That means being less forward-looking than usual until the situation is clearer. It also means we are prepared to act decisively if incoming information points clearly in one direction."
- "We will pay close attention to the risks and uncertainties to the Canadian economy and inflation. These include: the extent to which higher tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer prices; and how inflation expectations evolve," Governor Macklem said.
- BOC says it must maintain price stability while aiding economic growth.
- BOC says short-term inflation expectations have moved higher.
- Central bank modeled two scenarios: Limited tariffs and uncertainty, new tariffs are negotiated away; and prolonged trade war where Canada Q2 GDP contracts and economy falls into recession for a year.
- In milder scenario inflation +1.8% in 2025, below BOC's 2% target (Jan forecast +2.3%) and 2% in 2026. Deceleration partly attributed to the end of consumer carbon tax. GDP growth seen stalling in Q2.
- In worse scenario CPI +2.7% in 2026 (prior 2.1%). BOC forecasts GDP -1.3% in Q2 2025 at annualized pace. For the full year 2025 GDP slows to +0.8% (Jan projection +1.8%). For 2026 GDP is -0.2% (prior +1.8%).
- The Bank said the partial U.S. tariff relief announced April 9 "moved trade policy back towards the middle of the two scenarios."
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EQUITIES: Rolla pace (updated)
Mar-17 13:42
Equity Roll pace, just looking at the Estoxx (VGH5) around 3/4 of the front Month's Volume is spread related now
- ESA: 35%.
- NQA: 22% (below pace).
- DOW: 31%.
- VGA: 25%.
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Mar-17 13:40
- RES 4: 5976.83 50-day EMA
- RES 3: 5864.25 Low Jan 13 and a recent breakout level
- RES 2: 5859.54 20-day EMA
- RES 1: 5726.75 High Mar 12
- PRICE: 5688.25 @ 13:29 GMT Mar 17
- SUP 1: 5559.75 Low Mar 13
- SUP 2: 5483.50 2.00 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
- SUP 3: 5396.00 2.236 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
- SUP 4: 5341.87 2.382 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
The trend condition in S&P E-Minis remains bearish and fresh cycle lows last week reinforced current conditions. Moving average studies are in a bear-mode set-up highlighting a dominant downtrend. Sights are on 5483.50, a Fibonacci projection. Note that the short-term trend condition is oversold, a corrective bounce would allow this set-up to unwind. Firm resistance to watch is 5976.83, the 50-day EMA.
MNI EXCLUSIVE: Fed SEP To Show 2 Or Fewer Cuts, Two-Sided Economy Risks
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MNI reports on the outlook for the Fed's Summary of Economic Projections for March -- on MNI Policy MainWire now, for more details please contact sales@marketnews.com.
