The Bank of Canada will deliver its latest interest rate decision on Wednesday and almost surely hold rates steady at 2.25%, the same place where rates have been since a cut in October.
The market also sees very little chance of a rate hike at the July 15 meeting so there is no needs for the BOC to tip its hat.Looking further out, the market prices a 64% chance of a hike in October and is pricing in 35.5 bps of hikes by year end
That’s the backdrop heading into the decision slated for 9:45 am ET on Wednesday and note that there is no scheduled press conference but there will be a published statement from Governor Tiff Macklem. In April, the BOC assumed oil prices decline to $75 by mid-2027 and I don’t think they need to waver from that yet. Certainly, they would have hoped the war would be over by now but oil prices have stayed remarkably tame despite the blockade in Hormuz.
At $88.07 today, WTI is sequentially down from the prior BOC meeting. Domestically, there is plenty of talk about a recession and two consecutive quarters of negative growth but Q1 was down just 0.1% and April is looking robust, including today’s strong trade balance report. I don’t think soft growth will factor too heavily into BOC deliberations.