**As seen in Risk In The Week report 04/05/24, subscribe at cablefxm.co.uk/reports
The BoC held interest rates at 5% in March, this was in line with market expectations. Communications showed the central bank noting signs of wage pressures easing while underlying inflation remains persistent. It is worth noting that Governor Macklem said there had not been 'big surprises' in data since the January decision as more recent prints have undershot economists' expectations. February prices rose by 2.8% Y/y, headline CPI has fallen back to target, and missed the consensus estimate of 3.1%. March jobs numbers contracted unexpectedly by 2.2K while the unemployment rate rose to 6.1%, which is the highest since January 2022. Of course, markets do not price in a move in April but it will be interesting to see if BoC's Governor Mackle reacts to the softness of the data.
Analysts at TD Securities wrote that the central bank has a lot of information to digest since the March meeting but they don't see the BoC cutting rates until July, despite labour and inflation data. TD Securities noted that wage growth remains high and the central bank will likely wait to see further progress before easing policy. TD pointed at 1Q inflation coming slightly lower than what the BoC projected in the January MPR, they will be looking for potential revisions as the March forecasts are likely to lay the foundation for interest rate cuts.
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