Updates from the Bank of Canada (BoC)

 April 14, 2024

NOTE: THIS BLOG IS NOT FINANCIAL ADVICE NOR INVESTMENT ADVICE AND DOES NOT REFLECT THE VIEW OR OPINIONS OF MY EMPLOYER

On Wednesday, April 10th, the Bank of Canada (BoC) announced that it held its target overnight rate at 5.00%. With this, the bank rate remains at 5.25%, and the deposit rate remains at 5.00%. The BoC's target interest rate range is 1.00-3.00%, and the BoC expects the global economy to continue to grow at a rate of ~3.00%.

The S&P/TSX Composite Index is up ~4.49% year-to-date (YTD) basis, Canadian March unemployment was 6.10%, and Canada's consumer price index fell to 2.8% in February. With this, anticipation remains high for when the BoC will cut the overnight rate. Bank of Canada Governor Tiff Macklem stated that a June rate cut is "within the realm of possibilities". The BoC needs to see more data and further evidence that progress on inflation is sustained. The BoC watches core inflation closely, which excludes volatile items such as food, energy and effects of changes in indirect taxes. In February core inflation fell to 3.2% year-over-year (YoY). With this Macklem, noted "We're encouraged by that progress".

Overall, the tone of the meeting was slightly more dovish. With the recent data, traders have pulled back on expectations for a June rate cut. Prior to the announcement traders saw an 84% probability of a June cut which is now down to ~56% following the April meeting. Circle June 5th, 2024 on your calendar for the next update from the BoC.

NOTE: THIS BLOG IS NOT FINANCIAL ADVICE NOR INVESTMENT ADVICE AND DOES NOT REFLECT THE VIEW OR OPINIONS OF MY EMPLOYER

Sources:

Bank of Canada maintains policy rate, continues quantitative tightening. April 10, 2024. Bank of Canada. Link 

June rate cut 'within the realm of possibilities,' says Macklem, as Bank of Canada holds rate at 5%. Alicja Siekierska. Yahoo! Finance. April 10, 2024. Link

Bank of Canada says June rate cut possible if inflation keeps easing. Promit Mukherjee and David Ljunggren. April 10, 2024. Link