1. The BoC is expected to announce its decision on the interest rate today, at 14:00 (GMT).
  2. BoC is widely expected to remain on hold and keep interest rates at +1.25%.
  3. Market is currently pricing in the probability of retaining the current interest rate by 91%, according CAD Overnight Index Swaps.

On the other hand, please be advised that the headline inflation rate is currently at +2.2% yoy, which is the highest level for the past three years, while the Core BoC CPI rate is at +1.5% yoy.

Currently, we share the view that the bank will remain on hold, hence the market’s attention may turn to the accompanying statement.

For starters, the improving oil prices and new hopes for a revamp of NAFTA could strengthen the argument for a more hawkish accompanying statement.

On the other hand, negative results on the GDP growth rate and trade balance as well as continuing uncertainty in the markets could affect the bank’s outlook for the Canadian economy.

One further reason for a rather neutral to dovish statement would be Governor Poloz’s rather dovish comments on the 15th of March about the prospects of Canada’s economy.

Should there be a more hawkish stance we could see the CAD strengthening as it could pave the way for an early rate hike, maybe as early as May.

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