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2015.03.0220:14:00UTC+00Boc Took Out Insurance in Jan; may Wait Now, Then Cut Again

The Bank of Canada's (BoC's) rate decision will be on 4 March (10:00 ET).
The BoC unexpectedly cut its overnight lending rate (-25bps to 0.75%) in January, which it justified as "insurance" against the oil-price shock, a mostly negative development for Canada's economy. 
Oil prices have stabilised somewhat since then, and the latest speech by Governor Poloz was slightly hawkish. Standard Chartered Research notes:

  • We expect the BoC to stay on hold, although this remains a close call. If so, the statement is likely to be dovish. 
  • Money markets are pricing in c.8bps of a cut; only 5 analysts out of 22 polled by Bloomberg expect a 25bps cut. 
  • We think the next rate cut will be driven by data deterioration, which will likely be more obvious in coming weeks. 
  • A weak Q4 GDP print on 3 March poses the risk that the BoC may decide not to wait to ease policy. 

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