2 Jul 2015
BoC expected to cut rates by 25bps in Q3 – Rabobank
FXStreet (Barcelona) - The soft economic outlook and negative GDP growth seen in Canada suggests that the Bank of Canada will cut rates again by 25bps in Q3 this year, according to the Research Team at Rabobank.
Key Quotes
“We have changed our ‘no change’ outlook for the Bank of Canada. After this week’s disappointing GDP data for April (Canada produces GDP on a monthly basis!), it will be very difficult for GDP growth in Q2 to meet the projections that the Bank of Canada made in April. The same is true for Q1. This means that the insurance taken out in January (a 25 bps rate cut) to cushion the negative impact of low oil prices on the Canadian economy may no longer be sufficient. The Canadian economy has shown negative GDP growth in each of the first four months of the year.”
“On July 15, the Bank of Canada will update its projections and a downward revision for GDP growth seems likely. This would set the stage for a 25bps rate cut. We expect this cut to be made in Q3, most likely in July. After this cut, we expect the Bank to remain on hold.”
Key Quotes
“We have changed our ‘no change’ outlook for the Bank of Canada. After this week’s disappointing GDP data for April (Canada produces GDP on a monthly basis!), it will be very difficult for GDP growth in Q2 to meet the projections that the Bank of Canada made in April. The same is true for Q1. This means that the insurance taken out in January (a 25 bps rate cut) to cushion the negative impact of low oil prices on the Canadian economy may no longer be sufficient. The Canadian economy has shown negative GDP growth in each of the first four months of the year.”
“On July 15, the Bank of Canada will update its projections and a downward revision for GDP growth seems likely. This would set the stage for a 25bps rate cut. We expect this cut to be made in Q3, most likely in July. After this cut, we expect the Bank to remain on hold.”