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17 Jul 2013
Flash: Governor Poloz’s first – TD Securities
FXstreet.com (London) - Research teams at TD Securities said that Governor Poloz’s interest rate decision at the helm of the Bank of Canada will echo many of the themes expressed by his predecessor.
“With the global outlook more or less in line with what the Bank forecast in April, the accompanying communiqué should contain few surprises”. They said the Bank will have the opportunity to update its forecasts with the simultaneous release of the July MPR. “While a stronger start to the year for the Canadian economy may contribute to an upward revision to 2013 growth, the wider narrative of a grinding recovery with little inflationary pressure remains firmly intact”. The recent increase in yields, they said, and the depreciation in the currency is a welcome development to cool the housing market and provide an extra tailwind to exports. And most importantly, they feel, the Bank is likely to repeat its forward looking language noting that the current level of the overnight rate remains appropriate but that a modest amount of stimulus withdrawal will eventually be needed.
“With the global outlook more or less in line with what the Bank forecast in April, the accompanying communiqué should contain few surprises”. They said the Bank will have the opportunity to update its forecasts with the simultaneous release of the July MPR. “While a stronger start to the year for the Canadian economy may contribute to an upward revision to 2013 growth, the wider narrative of a grinding recovery with little inflationary pressure remains firmly intact”. The recent increase in yields, they said, and the depreciation in the currency is a welcome development to cool the housing market and provide an extra tailwind to exports. And most importantly, they feel, the Bank is likely to repeat its forward looking language noting that the current level of the overnight rate remains appropriate but that a modest amount of stimulus withdrawal will eventually be needed.