Bank Of Canada Rate Decision Due On Wednesday: What Economists Expect

(RTTNews) - The Bank of Canada is set to announce its interest rate decision 09:45 AM ET on Wednesday. The bank is widely expected to cut its key interest rate by 25 basis points to 4.75 percent.

In April, the Canadian central bank, led by Governor Tiff Macklem, held its target for the overnight rate at 5.0 percent, saying inflation is "too high".

ING: "...with inflation within the BoC's comfort band and unemployment rising, we see policymakers narrowly favouring a 25bp cut. However, the BoC may be cautious on signalling further easing as the rate spread with the Fed may widen excessively."

"Nonetheless, with the Fed expected to cut from September onwards we do see room for the BoC to lower the policy rate to 3.5% in the first half of 2025."

Oxford Economics: Below consensus Q1 GDP numbers, recent evidence that inflation is slowing, and our expectation for a modest recession lead us to believe the Bank of Canada will cut the policy rate by 25bps rate at June 5th meeting, economist Tony Stillo said last week.

The economist also saw a chance that the Bank of Canada would choose to hold rates in June and postpone cutting until July or September.

"Nonetheless, we don't think this would materially alter prospects for the economy," Stillo said.

"If the economy avoids the moderate downturn we predict and performs even better than the BoC's latest forecast, it will likely result in higher inflation and could prompt the BoC to further delay easing, hold the policy rate higher for longer, or possibly resume hiking later this year."