Boc To Cut Rates Ing

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Boc To Cut Rates Ing

Bank Of Canada (Boc) To Cut Rates By 25 Bps - Ing

According to ING analysts, the bank of Canada (BoC) is expected to lower the policy rate by 25 bps today. Right now, the market already expects a 21 bps rate cut at the meeting. As for the year 2024, a total of 65 bps worth of rate cuts will be delivered by the BoC, according to forecasts.

lot of economists are of the view that the BoC should cut the rates as opposed to keeping them unchanged. However, we also can't ignore the possibility of no rate change from the BoC.

Usd/Cad To Trade In 1.3800 - 1.3900 Range

In the short to medium term, the USD/CAD pair is expected to trade in the range of 1.3800 - 1.3900. If we look at Canadian inflation, it is already in the 1-3% range, which means there's no logical reason to keep the rates at such elevated levels.

The only valid argument for not lowering the rates should be the policy divergence with the US Federal Reserve. Lately, the gap between the US Federal Reserve and the Bank of Canada has widened and significantly impacted the CAD.

This has also given rise to another problem - Excessive devaluation of the Canadian Dollar will also increase the inflation levels. However, an exchange rate under 1.400 will mean the BoC wouldn't have to worry about currency in its decision-making.

There is also a possibility that the BoC governor will decide to maintain a cautious tone when it comes to easing the policy. In fact, he could also take shelter by saying that the actions will be data-dependent, similar to what we are seeing in the US Federal Reserve, ECB, & other central banks.

Right now, the current situation on the ground isn't supportive for the CAD as two more rate cuts are expected by the end of year 2024.

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