{"id":148613,"date":"2019-05-29T07:30:52","date_gmt":"2019-05-29T11:30:52","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=148613"},"modified":"2019-05-29T06:22:11","modified_gmt":"2019-05-29T10:22:11","slug":"boc-to-keep-rates-steady-at-1-75-in-may","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/05\/boc-to-keep-rates-steady-at-1-75-in-may\/","title":{"rendered":"BoC To Keep Rates Steady At 1.75% In May"},"content":{"rendered":"
May 29, 2019<\/div>
\r\n<\/div><\/div>

By <\/strong>Orbex<\/strong><\/a><\/p>\n

The Bank of Canada will be holding its monetary policy meeting today.<\/p>\n

Heading into the event,\u00a0the markets believe that the BoC will keep the interest rates steady at 1.75%.<\/strong>This will mark a sixth consecutive meeting where rates remained unchanged.<\/p>\n

The central bank raised interest rates five times since July 2017.<\/strong><\/p>\n

\"BoC<\/a>
BoC Interest Rates<\/figcaption><\/figure>\n

There will not be a press conference at today\u2019s meeting<\/strong>. The meeting will conclude with the release of the monetary policy statement from officials. But\u00a0later in the week, BoC Deputy Governor, Carolyn Wilkins will be giving a statement.<\/strong><\/p>\n

Uncertainties due to the global economic outlook remain a concern for policy markets. However, the tariffs being removed on steel and aluminum exports from Canada to the US does ease some tensions.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

Inflation in Canada which is rising at a slower pace is also eliminating the threat of a rush to hike interest rates. Therefore, policymakers are expected to remain patient when it comes to hiking interest rates.<\/p>\n

The most recent data on inflation shows that\u00a0consumer prices in Canada grew at a pace of 1.5% on a year over year basis in February<\/strong>. Inflation was below the BoC\u2019s 2.0% inflation target rate for the second consecutive month.<\/p>\n

However,\u00a0excluding energy and gas prices, consumer prices would have increased to 2.1%.<\/strong>\u00a0Energy and gas prices were down almost 11% during the month, reflecting the weaker oil prices for the period.<\/p>\n

The central bank could reiterate its stance that the current interest rate environment will be accommodative for growth.<\/p>\n

Risks for the BoC\u2019s Monetary Policy<\/strong><\/h2>\n

During one of his recent speeches, BOC\u00a0Governor, Poloz said that the escalating trade tensions between the United States and China were a key global growth risk.<\/strong><\/p>\n

Tensions have since increased since the\u00a0US ban on Huawei<\/a>\u00a0and many other US-based companies severing ties with the Chinese tech giant.<\/p>\n

But Poloz said that they were somewhat manageable. Speaking at an event earlier this month,\u00a0Poloz said that growth concerns remain due to lower oil prices as well<\/strong>. He said that the most severe risk could come if there was a correction in the housing prices.<\/p>\n

Bank of Canada officials were said to be closely monitoring the developments in each of the segments.<\/p>\n

The BoC\u2019s shift in monetary policy reflects that of the US Federal Reserve. The Fed, which was seen hiking rates aggressively into the end of last year has put rate hikes on hold. According to the most recent monetary policy meeting minutes, officials wanted to let inflation run above the 2% target rate for a while.<\/p>\n

This is in order to compensate for years of low inflation. It is quite likely that the\u00a0Fed will remain on the sidelines<\/a>\u00a0for the majority of this year. But there is still some speculation that it could cut rates.<\/p>\n

This is the same view for the Bank of Canada as well. Markets are starting to price in the probability of a rate cut sometime during the year. This is, of course, is subject to ground conditions.<\/p>\n

GDP growth remains the biggest risk. Although recent data suggest that the second quarter GDP will rebound. But in the event of worsening conditions, the prospects of a rate cut increases.<\/p>\n

BoC\u2019s Forward Guidance to Remain Critical<\/strong><\/h2>\n

Due to the lack of a press conference after today\u2019s monetary policy meeting, investors will be looking to the forward guidance.<\/p>\n

At the previous meeting, officials cut growth forecasts.\u00a0The BoC expects Canada\u2019s GDP to average around 1.2% for this year, a downward revision from 1.7% previously<\/strong>.<\/p>\n

Canada\u2019s annualized GDP growth rate was recorded at 1.6% in the fourth quarter of 2018. The latest GDP reports due later this week could show a further slowdown. Expectations are for the first quarter annualized GDP to ease to 0.9%.<\/p>\n

In all likelihood, today\u2019s BoC meeting will likely be a muted event. The next major policy change could come in the quarter ending June with the BoC coming out with fresh forecasts.<\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex The Bank of Canada will be holding its monetary policy meeting today. Heading into the event,\u00a0the markets believe that the BoC will keep the interest rates steady at 1.75%.This will mark a sixth consecutive meeting where rates remained unchanged. The central bank raised interest rates five times since July 2017. BoC Interest Rates […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-148613","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/148613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=148613"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/148613\/revisions"}],"predecessor-version":[{"id":148618,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/148613\/revisions\/148618"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=148613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=148613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=148613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}