BOC to keep its benchmark rate unchanged at 1.75% next Wednesday – Reuters poll

The latest Reuters poll of nearly 40 economists showed on Friday, they remain split on the Bank of Canada’s (BOC) monetary policy move. However, they believe the odds of a cut by year-end have increased dramatically.

Key Findings:

“While that suggests the BOC is unlikely to diverge from major central banks’ easing bias for long, an Aug. 23-28 poll of nearly 40 economists showed the central bank would keep its benchmark rate unchanged at 1.75% at its Sept 4 meeting.

A majority of economists, 22 of 39, also predicted no change to BOC rates in the fourth quarter of this year, either.

The remaining 44% of economists predicted, however, the bank would cut rates in the fourth quarter, including two who saw a 50-basis-point cut.

That is a significant shift in expectations from a poll taken ahead of the BOC’s July meeting, where only 15%, or five of 33 respondents, predicted any cut this year.

The poll showed the BOC will cut rates by 25 basis points to 1.50% in the first quarter next year and keep them on hold after that through end-2020 at least. That compared with 1.75% through next year predicted in the previous poll.

There is now a 60% chance of a cut by end-2019, according to the median probability of a smaller sample, 23 respondents who answered an additional question. That is a significant increase from 35% in the July poll.

That probability jumped to 80% for a BOC rate cut by the end of next year, compared with 45% given previously.”