The Bank of Canada (BoC) will release its post-meeting statement at 10:00 ET on 27 May. There is no press conference. The overnight lending rate is expected to be unchanged at 0.75%, in line with all analysts polled by Bloomberg. Standard Chartered says they have recently revised their BoC rate call to ‘unchanged’ until 2017 from previously expecting two further rate cuts. While recent data has been mixed, the BoC sees better prospects ahead. The BoC continues to expect the January rate cut to have stimulated activity, while it sees green shoots in non-oil exports and investment, along with a boost from US growth. It also sings the praises of a resilient labour market and elevated entrepreneurship; it believes in the economy’s continued progress in rebalancing away from the commodity sector. This optimistic tone was on display in Governor Poloz’ 19 May speech. The BoC’s 27 May statement will continue on this wavelength: while noting recent weaker data, it should still emphasise the better outlook. It should continue to point to “full capacity” being reached by end-2016. “The signal therefore will be that rates are firmly on hold for now, in our view. We expect rates to be on hold until at least 2017”, says Standard Chartered.
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