What To Expect From the Bank of Canada Today?
London: 24 January 2024 (TraderMade): The Bank of Canada's (BoC) Wednesday rate decision holds little suspense: another pause at 5% is widely expected. But investors and borrowers eagerly await hints about when borrowing costs might finally cool down.
The BoC is expected to hold on rates but listen closely for whispers of future easing hidden in the bank's carefully chosen words.
Current Interest Rate
In a move expected by markets, the Bank of Canada kept its key interest rate on hold at 5%. It was for the third meeting in a row during December 2023. This marks the highest borrowing cost in 22 years, but hints of progress on inflation offer hope.
The central bank also continued its quantitative tightening policy and attempts to combat inflation.
Economists’ Anticipations
Experts anticipate a "mushy middle" for the bank, caught between lukewarm growth and inflation not under control. While a rate hike or cut seems unlikely, the words in the bank's statement will speak volumes.
The crucial question: will the bank prioritize slowing core inflation (still rising) or the more optimistic picture of inflation excluding shelter (now at 2.4%)? Experts believe this choice will reveal the bank's openness to cuts in the coming months.
Rate watchers will dissect the statement for any shift in tone. Some economists expect the bank to soften its "hawkish" December stance, potentially influenced by surveys showing calmer inflation expectations.
