BoC to maintain overnight rate at 2.25% with a cautious tone – TD Securities

FXStreet Insights Team FXStreet

TD Securities' Global Strategy Team provides insights on the upcoming Bank of Canada Rate Decision scheduled for January. The expectation is for the overnight rate to remain at 2.25%, with a cautious tone in the policy statement. The report notes that new forecasts will reflect historical GDP revisions and a smaller output gap than previously projected.

Bank of Canada rate decision insights

"We look for the Bank of Canada to hold its overnight rate at 2.25% in January as the policy statement takes a more cautious tone. New MPR forecasts will incorporate both the 2025 Federal Budget and historical GDP revisions, with the latter implying a smaller output gap than projected in the October MPR, alongside softer Q4 GDP tracking and the recent deceleration across core inflation measures."

"The Bank has said it is prepared to respond if the outlook changes, but we remain a long way from reaching that threshold and we do not expect material changes to the Bank's forward guidance."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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