BoC to leave the policy rate on hold at 1.50% - Rabobank

Analysts at Rabobank expect the Bank of Canada to leave the policy rate on hold at 1.50% today in line with the broad consensus view.

Key Quotes

“The OIS curve indicates only a very small probability (<10%) of a hike today. The Bank remains firmly in data and market watch mode and as our Canada watcher Christian Lawrence has continued to highlight, the BoC will raise rates when the market is pricing in such a move.”

“The August purchasing managers’ index for manufacturing came in just shy of its June record, pointing to ongoing strength in activity and thus sufficient momentum to warrant some further gradual tightening going forward.”

“The market has almost fully priced in an October hike of 25bp now and we concur with this call, under the assumption that Canada does join the new trade agreement with the US and Mexico and assuming that domestic data do not sour dramatically.”