Can the BoC hold the line? - TDS

Sandeep Kanihama FXStreet Contributor

Andrew Kelvin, chief Canada strategist at TD Securities, suggests that heavy market pricing for Fed cuts has started to bring the Bank of Canada back into focus, as the BoC has historically followed the Fed in most easing cycles.

Key Quotes

“As exports have become a smaller part of the economic mix, the BoC will feasibly have more scope for divergence than in past cycles - but over long horizons US activity has been a reliable predictor of Canadian growth.”

“Our basic assumption is that the BoC remains data dependent, and will only move to cut rates if the domestic outlook weakens. However, the Bank only has a thin margin of error to work with before the domestic outlook forces the BoC into rate cuts; if the Fed eases and US growth slows, the current Bank of Canada policy stance will become untenable.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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