Sun, Dec 22, 2024

CAD: BoC: Focus Turns to Governor Macklem

The Bank of Canada cut its rate of Interest to 4.75% today from 5.00% in the last 6 meetings. The BoC Governor Tiff Mackhlem said inflation is easing and we see clearly visible in the Q1 2024, Job Wages quite low, Supply is higher in the Canadian Economy compared to Demand. So Further rate cuts is possible if inflation trend is easing continues in the market. Canadian Dollar plunged more against counter pairs after the disappointed rate cuts from BoC when compared to other developed central banks keeps higher in the market.

USDCAD is moving in Descending Triangle and market has reached lower high area of the pattern

USDCAD is moving in Descending Triangle and market has reached lower high area of the pattern

USDCAD will…?

BoC: Attention Shifts to Governor Macklem as Bank Cuts Interest Rate

The Bank of Canada (BoC) made an anticipated move by lowering its policy rate by 25 basis points to 4.75% during its recent event. In its statement, the bank pointed to ongoing signs of easing underlying inflation, indicating a need for less restrictive monetary policy. Governor Tiff Macklem emphasized the possibility of further rate cuts if inflation continues its downward trend. He stressed that rate decisions are made incrementally, considering the economy’s excess supply, leaving room for growth despite receding inflation.

CAD Bank of Canada will do tapering or rate hike is possible after last week positive employment data booked.

  1. Easing Inflation: The BoC noted continued evidence of underlying inflation easing, prompting a shift in monetary policy.
  2. Confidence in Inflation Outlook: Recent data have bolstered confidence that inflation will move closer to the 2% target, although risks to the outlook persist.
  3. High Shelter Price Inflation: While inflationary pressures persist in shelter prices, wage pressures appear to be gradually moderating.
  4. Monitoring Core Inflation: The governing council closely monitors core inflation, which shows a sustained downward trend in consumer price index (CPI).
  5. Focus Areas: The council pays attention to the balance between demand and supply, inflation expectations, wage growth, and corporate pricing behavior.

Governor Macklem’s comments highlight the cautious approach to monetary policy adjustments, reflecting the evolving economic landscape influenced by various factors such as supply dynamics and inflation trends.

CAD: BoC Cuts Rates, More Reductions Expected

Today, the Bank of Canada (BoC) announced a reduction in its interest rate from 5.00% to 4.75%, marking the first cut in six consecutive meetings. BoC Governor Tiff Macklem highlighted that inflationary pressures have been easing, a trend evident particularly in the first quarter of 2024. Additionally, Macklem noted that wage growth remains subdued and there is an imbalance between supply and demand in the Canadian economy.

EURCAD is moving in Ascending channel and market has reached higher high area of the channel

EURCAD is moving in Ascending channel and market has reached higher high area of the channel

EURCAD will…?

Given these economic indicators, the BoC is considering the possibility of further rate cuts if the trend of easing inflation persists. Following the announcement, the Canadian Dollar depreciated further against other major currencies. This depreciation was more pronounced compared to currencies of other developed nations, as the BoC’s decision to cut rates came as a disappointment to the market.

The Bank of Canada made a widely anticipated move on Wednesday, cutting its key policy rate by 25 basis points to 4.75%, marking its first reduction in four years. Governor Tiff Macklem stated that more easing could be on the horizon if inflation continued to ease. Economists were quick to predict another rate cut in July.

After maintaining interest rates at a more than two-decade high of 5% for almost a year, the Bank noted increasingly positive indicators for underlying inflation. Macklem mentioned that with sustained evidence of easing inflation, monetary policy no longer needed to be as restrictive.

Financial markets reacted with a 35% chance priced in for another cut to 4.50% next month. While a majority of economists had expected the cut, the Canadian dollar weakened after the decision.

The move by the Bank of Canada follows similar actions by Sweden’s Riksbank and the Swiss National Bank, aiming to relieve the burden on households and businesses and stimulate economic growth amid easing price pressures. The European Central Bank is also anticipated to follow suit on Thursday.

ECB moved for Dovish tone

Inflation in Canada has dipped to a three-year low of 2.7% in April, below the Bank’s 2% target but still higher than expected. Macklem indicated that further rate cuts could be expected if inflation continued to ease, emphasizing a cautious approach.

Economists, including Royce Mendes from Desjardins Group and Andrew Grantham from CIBC, anticipate further cuts, with expectations of a total of four reductions this year. The Bank’s next rate announcement is scheduled for July 24, coinciding with the release of its latest quarterly forecasts.

Despite slower-than-expected economic growth in the first quarter, Macklem noted that the economy still had room for expansion given the excess supply, even as overall inflation rates continued to decline. The Bank remains focused on monitoring various economic indicators, including demand and supply dynamics, inflation expectations, wage growth, and corporate pricing behavior.

CAD: BoC slashes benchmark rate by 25bps to 4.75%

In a move that surprised markets, the Bank of Canada (BoC) slashed its interest rate from 5.00% to 4.75%, marking the first cut in six consecutive meetings. BoC Governor Tiff Macklem cited easing inflation and sluggish job wage growth, coupled with an oversupply in the Canadian economy, as the driving factors behind the decision. If the trend of easing inflation persists, further rate cuts may be on the horizon. Consequently, the Canadian Dollar depreciated against other major currencies, reacting more negatively compared to currencies of other developed nations.

AUDCAD is moving in box pattern and market has reached resistance area of the pattern

AUDCAD is moving in box pattern and market has reached resistance area of the pattern

AUDCAD will move…?

On Wednesday, the Bank of Canada (BoC) made a significant move by reducing its benchmark interest rate by 25 basis points, marking the first rate cut in over four years. This decision, announced at 9:45 a.m. ET, brings the policy rate down to 4.75 percent.

The move came as no surprise to economists, who had widely anticipated this adjustment. The central bank’s decision was influenced by several factors, including progress in lowering inflation, weaker-than-expected economic growth in the first quarter, and employment figures showing a slower pace of growth compared to the working-age population.

In a statement following the decision, the Bank of Canada noted, “With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive and reduced the policy interest rate by 25 basis points.”

Bank of Canada Policy meeting scheduled Today evening

The statement also highlighted recent data that has bolstered confidence in inflation trending towards the 2 percent target. The announcement was followed by a press conference at 10:30 a.m. ET, where Governor Tiff Macklem elaborated on the central bank’s decision.


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