BoC Preview: Rate Unchanged - Nomura
Charles St-Arnaud, Research Analyst at Nomura, suggests that the BoC is
expected to maintain neutral policy stance while all eyes will be on
estimate of increased fiscal spending.
Key Quotes
“The
Bank of Canada (BoC) holds its next policy meeting on 13 April. At the 9
March meeting the BoC left its policy rate unchanged at 0.50% and noted
“the risks to the profile for inflation are roughly balanced” and that
“the Bank’s Governing Council judges that the current stance of monetary
policy is appropriate”, suggesting a neutral policy stance and that the
BoC is not considering further easing.
With the economic data
suggesting better growth but continued uncertainty, we believe that the
BoC will keep its policy rate unchanged at next week’s meeting and will
reiterate its neutral policy bias. However, the focus at the meeting is
likely to be on the Monetary Policy Report, as it will include an
analysis of the impact of the fiscal stimulus on the economic outlook.
We think the BoC is likely to find that the impact on growth from the
Budget is slightly lower than the government estimates.
We
believe that the upgrade to the growth outlook because of the better
starting point and the impact of fiscal spending means that the BoC is
likely to expect the output gap to close by the end of 2017.”
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