As expected, the Bank of Canada (BoC) kept its monetary policy unchanged after Wednesday’s meeting. According to National Bank of Canada analysts, assuming the economic recovery regains its footing, consider the BoC could step down its purchase program at the October meeting.
Key Quotes:
“This was largely an as-expected meeting as the Bank held off from stepping down its weekly QE pace. That said, assuming the recovery is able regain its footing over the coming 7 weeks, we think the Bank will be looking to step down its pace of QE at the late-October meeting. As always though, data dependency is the name of the game.
“Two jobs reports and another month of GDP data in the interim will be critical in informing that outlook (the Bank is likely to continue to look through inflation data).”
“When it comes to the policy rate, we haven’t yet thrown in the towel on our expectation for liftoff in 2022:Q3. We would however, concede that the weaker growth trajectory skews the risks to that forecast later (2022:Q4), rather than earlier (2022:Q2). It follows that, based on the data we have now, we don’t expect the Bank’s forward guidance on the policy rate (i.e. output gap closure in the second half of 2022) to change in October when its new projections are laid down.”
