He says that money markets have priced in a 40-per cent chance that the Bank of Canada could see an interest rate cut at its next decision on April 12 with even higher odds of a cut of some kind by the summer.
CIBC Capital Markets senior economist Katherine Judge said in a note to clients Tuesday that unless the banking situation alters significantly from now, she sees a quarter-percentage-point hike from the Fed on Wednesday with another step of that size later in the year. A less-aggressive tightening cycle for the U.S. Fed might take some pressure off of the Bank of Canada. Some economists theorized last week that the Fed’s hawkish stance might push Canada’s central bank to further hikes this year, lest it fall too far behind and cause the loonie to sink compared to the U.S. dollar.Some big bank economists think the market speculation of rate cuts from the Bank of Canada coming sooner than later are premature.
“To ease at the first whiff of trouble would frustrate the ability to durably get inflation under control,” he wrote.Benjamin Reitzes, BMO’s managing director of Canadian rates and macro strategist, told Global News in an email that, assuming there’s not much further fallout in the U.S. banking system, “this is likely a bump in the road, and the focus will shift back to inflation.”
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