BoC to leave its overnight rate unchanged at 0.50% - TDS

The research team at TDS expects the Bank of Canada to leave its overnight rate unchanged at 0.50% in April, in line with the universal consensus. However stronger economic momentum have led markets to pull forward expectations of a rate hike.

Key Quotes

“We look for the Bank to revise higher its 2017 economic outlook for Canada and signal an earlier closing of the output gap in 2018, but we see little scope for upward revisions further out, indicating that much of the recent strength in growth is largely transitory.”

“Given that markets expectations for a rate hike have risen since early March following better-than expected data, we see scope for the Bank to disappoint markets with cautiously dovish remarks on the sustainability of the outlook due to the disappointing performance of exports and business investment.”