BoC: Market pricing for further easing remains low - Westpac

Research Team at Westpac, notes that the Bank of Canada’s overnight rate has been held steady since July 2015 when it was cut from 0.75% to 0.5%.

Key Quotes

“At its September 2016 meeting, the BoC was less optimistic than expected by markets. While they still expected growth to bounce back in H2, they noted that “risks to the profile for inflation have tilted somewhat to the downside”.

GDP in Q2 came in below the BoC’s forecasts. While the BoC had already taken into account the impact from the Alberta wildfires, they highlighted disappointing exports over the quarter, and argued that: “While the strength in exports during July was encouraging, the ground lost over previous months raises the possibility that the profile for economic activity will be somewhat lower than anticipated in July”.

Market pricing for further easing remains low, around 10% chance by end-2016.”