Bank of Canada to keep its remaining powder dry at the April meeting – TD Securities

On Wednesday, the Bank of Canada will announce its monetary policy decision. According to analysts from TD Securities the central bank will keep rates unchanged at 0.25% and the purchase program at $5bn/week. 

Key Quotes: 

“We expect the Bank of Canada to keep its remaining powder dry at the April meeting, leaving the overnight rate and Large Scale Asset Purchases (LSAP) unchanged at 0.25% and $5bn per week, after 100bp of intermeeting cuts since the March FAD.”

“With the Bank sitting on its main policy levers, markets will turn their attention towards updated economic projections and the neutral rate estimate. While the former is likely to show a sharp contraction in 2020H1, we will be more interested in the annual averages for 2020 and 2021 for a barometer for Bank's expectations around the duration of the shutdown and strength of the recovery.”

“The April MPR also contains the Bank's annual reassessment of the neutral rate which should reveal a modest downward revision from the current 2.25-3.25% range.”