MNI BoC Review, Mar'24: See You In Five Weeks

Executive Summary

• The BoC left its overnight rate at 5% and said it’s still too early to consider lowering the policy rate.
• The concluding paragraph of the decision statement was identical to January and the threat from persistent underlying inflation was mentioned multiple times across statements, but wage pressures may be easing.
• Macklem noted some progress in latest inflation data but wants further deceleration in coming months and greater consistency across a range of metrics.
• It was met with a mildly hawkish reaction. Cumulative cuts dropped to 18-20bps for June from ~22.5bp priors. Amongst analysts, Scotia stand out with their view of a first cut in September.
• Apr 10 is just five weeks away but sees one CPI report, two labour reports and the quarterly BOS/CSCE surveys as specifically flagged by Macklem. It comes ahead of the federal budget on Apr 16, with the risk of surprise fiscal impulse possibly making the Bank less willing use the April decision to tee-up a rate cut in June, but the Bank was prone to surprising last year and won’t feel obliged to give a meeting’s notice.

PLEASE FIND THE FULL REPORT HERE:

BOCReviewMar2024.pdf