BOC: Odds of ‘micro rate cut’ rise amid covid lockdowns – Reuters
Money markets have raised their bets on a potential Bank of Canada (BOC) micro rate cut' next week, as stricter COVID-19 restrictions weigh on the prospects of an economic rebound later this year, per Reuters.
Key takeaways
“Reflecting rate cut risk, Canada’s three-month overnight index swap rate has moved below the 0.2% level where the overnight rate has been settling. It has eased 4 basis points since November to trade at about 0.17%.”
“A rate cut could add stimulus by reinforcing already low borrowing costs and checking further gains for the Canadian dollar.”
“Adjusting the asset-purchase program and setting yield-curve targets are other easing options the BoC has flagged, seeing risk of economic scarring if the recovery takes too long.”
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
