Rabobank BoC rate decision outlook: No change in policy rate

Rabobank provides its BoC rate decision outlook ahead of the Boc rate announcement tomorrow. Can we anticipate the rate to be more hawkish than expected?

6 December, AtoZForex Tomorrow, the Bank of Canada (BOC) is about to publish its latest policy rate decision. The interest rate is the primary tool the BOC uses to communicate with investors about monetary policy.

Rabobank BoC rate decision outlook

Ahead of the announcement, markets are anxiously awaiting the results. Meanwhile, Senior Market Strategist at Rabobank, Christian Lawrence has shared the views of Rabobank on the upcoming BOC announcement.

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The Dutch multinational banking and financial services company believes that the markets’ expectations imply “the same outcome with almost nothing priced into the front end of the Canadian curve in terms of cuts. “ Moreover, the bank expects that tomorrow’s decision will not be accompanied by a Monetary Policy Report. Rabobank’s statement is as follows:

“In the aftermath of the MPR release, Canadian data have been somewhat mixed with CPI inflation data printing slightly below expectations on a core basis and retail sales disappointing but GDP data for Q3 showed some signs of optimism.”

The bank states that Canada’s GDP have emerged above expectations with a 3.5% q/q annualized reading. Rabobank further states that GDP figures were driven by the government spending. Moreover, exports have pushed the growth significantly.

Rabobank oil projections

Moreover, the bank believes that two developments are worth noting on the oil sector. These include PM Trudeau’s confirmation of an oil pipeline extension and the OPEC meeting. Rabobank analysts think that Kinder Morgan Trans Mountain project will increase capacity from 300kbpd to 850kbpd. Yet, the bank believes that OPEC oil cut deal was of more importance to the oil prices.

As for the oil projections, the bank has left its 1-year horizon view unchanged. The bank believes that the underlying fundamental have weakened and the market still will not stabilize until the second half of 2017.

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