Instant view: Bank of Canada holds interest rates, no timing on cuts
TORONTO (Reuters) - The Bank of Canada (BoC) held its key overnight rate at 5% on Wednesday and said while underlying inflation was still a concern, the bank's focus is shifting to when to cut borrowing costs rather than whether to hike again.
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COMMENTS
ROYCE MENDES, DIRECTOR & HEAD OF MACRO STRATEGY AT DESJARDINS
"We continue to believe that rate cuts will begin as early as April. The economy is facing a set of unique challenges in the form of the rising impact of mortgage renewals, slower population growth and CEBA (the Canada Emergency Business Account) loan repayments. As a result, central bankers should be able to begin easing policy to a less restrictive stance in the not-so-distant future."
DARCY BRIGGS, PORTFOLIO MANAGER, FRANKLIN TEMPLETON CANADA
"The Bank of Canada is still expecting a soft landing. Not expecting a deep downturn."
"They are concerned about the core inflation metrics. Well it depends on which measure of core inflation you are using ... The inflation metric is still concentrated in the housing sector."
"What we are really starting to see is the impact of higher rates on consumption ... Maybe the Bank of Canada in the next meeting may be changing tune if the data continues to triangulate beyond the softer landing trajectory."
DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS, SCOTIABANK
"Generally speaking, he (BoC Governor) is pushing against the market pricing for nearer-term rate cuts when he says that the debate now is how long do they have to remain at the current 5% policy rate and that they are as concerned as they were previously even maybe a bit more so about inflation risk. So, no hints that rate cuts anytime soon in this set of communications."
ANDREW KELVIN, CHIEF CANADA STRATEGIST AT TD SECURITIES
"It's largely as expected insofar as it's a very similar message to what we saw in December. They remain concerned about the persistence of underlying inflation. Therefore, while they are almost certainly done with rate hikes, they are not looking for near term rate cuts until we see further progress on the inflation front."
"Looking at 2024 (GDP forecast) strikes me as perhaps a touch optimistic. The 2025 forecast, they're presumably looking for a sharp rebound after a period of slow growth and it probably includes a period of lower interest rates by 2025, which probably in their models would be responsible for boosting growth."
(Reporting by Nivedita Balu, Ismail Shakil, Fergal Smith; Editing by Denny Thomas)
