Bank of Canada to downgrade growth forecast tomorrow

By: Adam Button

The Bank of Canada will release its interest rate announcement and the quarterly Monetary Policy Report tomorrow at 10 am ET (1500 GMT). There are zero expectations for a change in policy or rhetoric so the main item of interest will be the economic forecasts. Two week's ago the Bank of Canada's Macklem said "near-term momentum now appears to be slightly softer than previously anticipated" and that will be reflected in the updated forecasts. The current BOC forecast is for 2.3% growth in 2012 and 2.4% in 2014. The consensus estimates are 1.8% and 2.4%, respectively.  Headlines that the BOC has revised down growth could spark a negative knee-jerk reaction for the Canadian dollar but as long as estimates remain at or above the consensus, the initial reaction will fade.