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2 Mar 2015
BoC faces a close call this week – TDS
FXStreet (Edinburgh) - In light of the next BoC monetary policy meeting this week, Macro Strategist at TD Securities David Tulk argued that it will be a very close decision.
Key Quotes
“The absence of a strong conviction in the call for a pause next this is rooted in an admittedly incomplete understanding of using monetary policy to secure insurance in a risk management framework”.
“Based on traditional guideposts to monetary policy, there was not a overwhelming case for the January cut. But this is not a moot point”.
“In assessing its impact on the economy, a mere 25bps of stimulus does little to inspire growth and lift inflation in the face of a severe downturn in the price of oil”.
“In thinking the Bank holds the line at 75bps this week, we think the Governor seems willing to let the downside risks be realized before considering more stimulus”.
“However, we cannot fully shake the feeling that if the Bank already sees more weakness to come they could just as well cut again this week”.
“In our final assessment, we see this call as very close to a coin toss that does not create compelling trading opportunities. The unfortunate reality is that this uncertainty around rate decisions is not likely to go away any time soon”.
Key Quotes
“The absence of a strong conviction in the call for a pause next this is rooted in an admittedly incomplete understanding of using monetary policy to secure insurance in a risk management framework”.
“Based on traditional guideposts to monetary policy, there was not a overwhelming case for the January cut. But this is not a moot point”.
“In assessing its impact on the economy, a mere 25bps of stimulus does little to inspire growth and lift inflation in the face of a severe downturn in the price of oil”.
“In thinking the Bank holds the line at 75bps this week, we think the Governor seems willing to let the downside risks be realized before considering more stimulus”.
“However, we cannot fully shake the feeling that if the Bank already sees more weakness to come they could just as well cut again this week”.
“In our final assessment, we see this call as very close to a coin toss that does not create compelling trading opportunities. The unfortunate reality is that this uncertainty around rate decisions is not likely to go away any time soon”.