MNI BoC Preview, Jan'24: Expecting Too Soon For Cuts Reiteration
Jan-22 18:50By: Chris Harrison
Canada
EXECUTIVE SUMMARY
- The BoC is unanimously expected to hold its policy rate at 5% with greater focus on the statement’s tone and macro forecasts before Macklem’s press conference.
- One important area will be to what extent the BoC sees the recent resurgence in its preferred core inflation metrics as “bumps along the way” in a path back towards the 2% inflation target.
- The market has pushed back fully pricing a first rate cut from April to June and analysts expect hawkish leaning commentary. We expect similar and accordingly see risk skewed to a dovish surprise if greater weight is put on the softer aspects of nuanced data or inflation forecasts are lowered.
- A couple analysts also start to look at the possibility of reducing the pace of QT amidst liquidity concerns.
- Housekeeping: note the new format for BoC decisions, with announcements 15mins earlier at 0945ET and all to be followed by a press conference at 1030ET. Possibly confusing matters, the opening statement to the press conference will be released with the decision statement. The MPR will remain quarterly.
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