BoC still plans to take rates back to neutral - Westpac

In view of Richard Franulovich, head of FX strategy at Westpac, BoC still plans to take rates back to neutral but they have materially scaled back their optimistic outlook for the economy.

Key Quotes

“The BoC have revised their slack estimates too, adding to the lack of urgency, the Bank noting, "Downward historical revisions by Statistics Canada to GDP, together with recent macroeconomic developments, indicate there may be additional room for noninflationary growth".”

“A BoC hike in January 2019 is now doubtful as is our base case for four hikes through to end-2019. We jettison our constructive CAD view, USD/CAD near term risks skewed to a test of 1.37- 1.38.”