BoC: No change on Wednesday, rate hike likely in October - Rabobank

Analysts at Rabobank, expect the Bank of Canada to leave the policy rate unchanged on Wednesday and they see a rate hike in October. 

Key Quotes: 

“We expect the Bank of Canada to leave rates on hold at 1.50% at the meeting on Wednesday, 5th September. As it stands, 17 of 18 analysts surveyed by Bloomberg don’t expect a move while one analyst is calling for a 25bp hike. The market stands in line with the majority of analysts as the CAD OIS curve points to around a 10% chance of a 25bp hike.”

“The accompanying statement is likely to reiterate the Bank’s stance that it wants to raise rates but will do so gradually and cautiously.”

“The Bank is in both data and market watch mode. That is to say, if data remain upbeat and the market is pricing in a hike then the Bank will raise rates.”

“We expect the BoC to raise rates 25bp to 1.75% at its October 24th meeting. As it stands, the CAD OIS market is pointing to around an 80% chance of a 25bp. To our mind, it would take a significant souring of data or news that Canada will not be part of the new US-Mexico trade deal for the Bank to remain on hold.”