MNI BoC Preview-April 2025: Holding On For More Certainty

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EXECUTIVE SUMMARY: 

• In what is seen as a very close call, the Bank of Canada is expected to maintain the overnight rate target steady at 2.75% on Wednesday.
• A pause would come after 225bp of cuts to the middle of the BoC’s currently estimated neutral range of 2.25-3.25%, leaving policymakers in a position to see further developments in the US-Canada trade dispute and the relevant data impact before pulling the trigger on further moves.
• A steady approach would befit BOC Governor Macklem’s comments in March that reiterated the importance of maintaining price stability, with monetary policy becoming less forward-looking and more nimble as officials attempt to navigate the uncertainty of the ongoing trade dispute with the US.  
• The latest Monetary Policy Report could show upped expectations of inflation with lower growth forecasts vs the last edition in January, with the overall communications maintaining a tone of uncertainty.
• Reflecting the uncertainty, analysts’ expectations of the terminal overnight rate range from 1.50-2.75%.