23 Jan 2014
Flash: Odds of BoC rate cut at 30% in 6 months - Nomura
FXstreet.com (Bali) - The probability of a cut by the BoC over the next six months remains at 30%, notes Charles St-Arnaud, Economist at Nomura.
Key Quotes
"Overall, the BoC's willingness to cut rates has increase since the December meeting, in reaction to the downside surprise to inflation."
"However, with growth revised slightly higher and remaining slightly above potential over the projection period, the BoC likely decided that a cut would be premature at this point given the continued concerns regarding household imbalances."
"Our base case remains that the BoC will remain on hold until 2015 and we continue to believe that the probability of a rate cut is about 30% over the next six months."
"We believe that the threshold for the BoC to actually cut rates remains high given household imbalances and the growth outlook."
"We believe that further underperformance of inflation are unlikely to be sufficient to justify a cut and would require a weakening in the growth outlook."
Key Quotes
"Overall, the BoC's willingness to cut rates has increase since the December meeting, in reaction to the downside surprise to inflation."
"However, with growth revised slightly higher and remaining slightly above potential over the projection period, the BoC likely decided that a cut would be premature at this point given the continued concerns regarding household imbalances."
"Our base case remains that the BoC will remain on hold until 2015 and we continue to believe that the probability of a rate cut is about 30% over the next six months."
"We believe that the threshold for the BoC to actually cut rates remains high given household imbalances and the growth outlook."
"We believe that further underperformance of inflation are unlikely to be sufficient to justify a cut and would require a weakening in the growth outlook."