BoC Preview: Forecasts from seven major banks, leaving rates on hold

The Bank of Canada (BoC) is set to announce its interest rate decision on Wednesday, March 8 at 15:00 GMT and as we get closer to the release time, here are the expectations as forecast by the economists and researchers of seven major banks, regarding the upcoming announcement.

BoC is expected to keep rates steady at 4.5% in March. There is no press conference this time.

ING

“We have much more confidence that the BoC will leave policy rates unchanged. At the 25 January BoC policy meeting, the governing council stated that it expects to ‘hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases’ at upcoming meetings. The data since then has shown inflation undershooting expectations and GDP growth stalling, yet the economy continues to create jobs. We will get an update on Canadian jobs at the end of the week and we wouldn’t be surprised to see a correction lower given the volatility in the series.”

TDS

“The downside surprise on Q4 GDP should allow the BoC to look past the blockbuster January jobs number and keep the overnight rate unchanged at 4.50%. The forward guidance is not expected to change too much from January, though the BoC might want to put more emphasis on the conditional nature of its pause. A low-energy BoC meeting would likely direct CAD's focus to the evolving global narratives. We see USD/CAD holding the 1.33/1.37 range unless US inflation goes awry this month.”

NBF

“We expect the BoC to keep its policy rate unchanged. The decision won’t come with updated projections, but the rate statement should nonetheless provide a high-level opinion on how Governing Council views recent economic developments. Our expectation is that it notes the economy is progressing ‘broadly as expected’, a characterization which should give investors more confidence that April will also result in no change to policy. A speech delivered by Senior Deputy Governor Carolyn Rogers on Thursday should reinforce this. After a year of frequent surprises on BoC announcement days, we’re relatively confident this will be a straightforward affair.” 

CIBC

“The BoC is a near lock to leave rates unchanged this month but will retain language indicating that the pause is conditional on seeing the economy track in line with the Bank’s expectations.”

MUFG

“We expect the BoC to remain in wait-and-see mode this week as they continue to assess the lagged impact of monetary tightening delivered to date.”

Citibank

“The BoC’s policy decision is very likely to see the cash target unchanged at 4.50% given that economic developments in Canada have evolved ‘broadly in line with the MPR outlook’. The most important adjustments in the policy statement will be to the guidance, where Citi analysts’ base case is for very little change.”

Wells Fargo

“For the first time since January last year, we expect the BoC to hold its policy rate steady at 4.50%. In January, the BoC raised rates 25 bps but also said if economic developments evolve broadly as expected, it would hold interest rates steady while it assessed the impact of its cumulative interest rate increases. That suggests a relatively high bar to resume rate hikes, and one we do not think has yet been met.”