MNI BoC Preview-June 2025: Not Enough Clarity To Cut
Jun-03 01:01By: Tim Cooper
Canada
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EXECUTIVE SUMMARY:
- The Bank of Canada is likely to maintain the overnight rate target steady at 2.75% for a second consecutive meeting on Wednesday, though analyst opinion and pricing eye a possible 25bp cut.
- April’s pause came after 225bp of cuts to arrive in the middle of the BoC’s currently estimated neutral range of 2.25-3.25% (unchanged in the April Monetary Policy report).
- With this having put the BOC in a position to see further developments in the US-Canada trade dispute before pulling the trigger on further moves, incoming economic data have tilted toward a further hold.
- In particular, better-than-expected GDP and a pickup in core inflation should tilt the balance toward a hold.
- Almost all analysts expect at least one further cut (markets are split between 1 and 2), with current expectations of the terminal overnight rate ranging from 1.75-2.75%.
