The Bank of Canada (BOC) is expected to keep its policy rate unchanged at 2.25% for the second consecutive meeting. Brown Brothers Harriman (BBH) analysts note that the BOC will likely reiterate its on-hold guidance, stating that it sees the current policy rate as appropriate for keeping inflation close to 2%. However, uncertainties surrounding trade relations with the U.S. may affect the CAD outlook.

BOC cautious amid trade uncertainties

"The BOC is widely expected to keep the policy rate unchanged at 2.25% for second straight meeting. The BOC is also poised to reiterate its on hold guidance that it “sees the current policy rate at about the right level to keep inflation close to 2%.”"

"The BOC will likely stress again that “uncertainty remains elevated,” implying it’s in no rush to start raising rate."

"We see room for the market to push out expectations for a BOC rate hike which is a modest headwind for CAD."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)