VOT Research Desk
The Bank of Canada (BoC) is expected to raise interest rates this Wednesday, according to economists at Goldman Sachs.
Our economists anticipate the Bank to deliver another 50bp boost at this week’s BoC meeting, but under-delivery is still a possibility on two fronts.
First, given the sequential slowdown in underlying inflation, it’s likely that the BoC sees sufficient cause to raise rates by just 25 basis points. Second, we believe that the BoC will probably shortly take a break, which the statement or press conference may already have hinted at for the following week.
Although CAD has outperformed the rest of the G10 recently, it has had a strong performance this year on the BoC’s aggressive hiking cycle. Reduced oil prices and lower yields are primarily to blame for this (and a weaker USD on crosses).
Although CAD on Crosses continue to be our favorite form of representation in a situation where the USD is strong, which we anticipate will last for the next three to six months.
