This post is actually up on the internet …. somewhere! For some reason it didn't make it to the front page of ForexLive so I am posting it again (if at first you don't succeed, etc.)
Adam posted an earlier preview here:
Bank of Canada preview: Don't expect clear clues from Poloz
A couple more now, via:
RBC:
- We see the BoC's target rate holding steady at 1.25% after the May policy meeting.
- Economic growth is looking slightly firmer in Q1 than expected in the April MPR (1.8% vs 1.3%, see details below), though it is still just equal to the BoC's updated potential growth rate. This would mark the third consecutive quarter around this level, with the output gap roughly closed during this time and the BoC's three core measures averaging 2.0% for three straight months.
- Governor Poloz & Co. have emphasized headwinds facing the economy, including from ongoing NAFTA negotiations, the response of highly indebted consumer to higher interest rates and the evolution of the housing market following more stringent mortgage stress-testing requirements. These have prompted the BoC to note that the policy rate should rise over time, but with some degree of accommodation remaining (i.e. policy rate below the 2.5-3.5% estimated neutral rate).
- Consistent with this - and a firmer growth profile in the rest of 2018 - we anticipate the next hike from the BoC to come in July.
CIBC:
- In Canada, the central bankers will likely have had a preview peek at the Q1 GDP data when they make their rate announcement on Wednesday. We now look for an even 2% real GDP pace, which nicely tops the last BoC projection. But there's no reason for Governor Poloz to rush to judgement. The average pace over the last three quarters will still have been below 2%, and core inflation has yet to breach the Bank's target for CPI.
- No doubt, the BoC will also include a reference to trade uncertainties, which have only gotten messier as the US now waves the threat of auto tariffs. Look for rates to stay unchanged, and despite our call for a hike in July, the Bank will only say that higher rates are coming, with no clue as to when.
