The Bank of Canada is set for its latest decision at the top of the hour. Economists aren't expecting a change from the 4.50% overnight rate and the rates market prices 'no change' at 95%.
The BOC is in watch-and-wait mode right now after a series of hikes. The housing market has slowed dramatically and prices have fallen from the Feb 2022 peak but supply is still constrained.
Eyes will be on the statement and how the communication around a conditional pause evolves, especially given that employment numbers have been so strong and that Q1 growth will be stronger than the BOC expected.
The final paragraph in the statement currently reads:
At its January decision, the Governing Council indicated that it expected to hold the policy interest rate at its current level, conditional on economic developments evolving broadly in line with the MPR outlook. Based on its assessment of recent data, Governing Council decided to maintain the policy rate at 4½%. Quantitative tightening is complementing this restrictive stance. Governing Council will continue to assess economic developments and the impact of past interest rate increases, and is prepared to increase the policy rate further if needed to return inflation to the 2% target. The Bank remains resolute in its commitment to restoring price stability for Canadians.
Overall, I don't see this one being a big market mover and the US CPI fallout will continue to dictate trading today, including in CAD. If there's a surprise, it will be that the BOC moves more-comfortably to the sidelines.
Further out, 23 of 31 economists in the Reuters survey expect the BOC to remain on hold through year end with 7 expecting one cut.
