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3 Mar 2015
Downside surprise in 4Q 2014 Canada GDP to boost rate cut expectations – RBS
FXStreet (Barcelona) - The Research Team at RBS, views that a weaker than expected Canadian 4Q 2014 GDP might boost rate cut expectations by the BoC in the March meeting.
Key Quotes
“Following more neutral commentary from Bank of Canada Governor Poloz last week, the consensus has quickly shifted away from pricing in a cut at the March meeting. We think the Governor’s comments were not intended to be a signal of steady policy in March, but rather a signal of the data dependence of each policy decision going forward.”
“Weakness in retail sales, a decline in full-time employment, and widening current account and trade deficits released since the BoC last met may be enough to warrant a second consecutive cut at the March meeting on Wednesday, despite recent stability in energy prices.”
“The data-dependent nature of the BoC’s decisions means that 4Q GDP should be a critical release, and the pace of growth is likely to slow in the fourth quarter.”
“The consensus estimate of a 2.0% q/q annualized growth pace is well below the BoC’s January forecasts, which revealed the BoC anticipated a 2.5% q/q annualized growth pace in the fourth quarter.”
“A downside surprise in 4Q 2014 GDP growth could boost rate cut expectations for the March meeting, though even an in-line print would be a disappointment relative to BoC forecasts.”
Key Quotes
“Following more neutral commentary from Bank of Canada Governor Poloz last week, the consensus has quickly shifted away from pricing in a cut at the March meeting. We think the Governor’s comments were not intended to be a signal of steady policy in March, but rather a signal of the data dependence of each policy decision going forward.”
“Weakness in retail sales, a decline in full-time employment, and widening current account and trade deficits released since the BoC last met may be enough to warrant a second consecutive cut at the March meeting on Wednesday, despite recent stability in energy prices.”
“The data-dependent nature of the BoC’s decisions means that 4Q GDP should be a critical release, and the pace of growth is likely to slow in the fourth quarter.”
“The consensus estimate of a 2.0% q/q annualized growth pace is well below the BoC’s January forecasts, which revealed the BoC anticipated a 2.5% q/q annualized growth pace in the fourth quarter.”
“A downside surprise in 4Q 2014 GDP growth could boost rate cut expectations for the March meeting, though even an in-line print would be a disappointment relative to BoC forecasts.”