As expected, the Bank of Canada, kept its monetary policy unchanged after the June meeting. According to National Bank of Canada analysts, there was nothing in the statement to signal a taper was imminent. They warn the situation could change depending on how June jobs numbers shake out and how the Federal Reserve alters its policy stance next week.
“There was nothing all that surprising in today’s statement. With the economy performing broadly in line with the Bank’s April projections, we didn’t see scope for any hawkish adjustments to policy. As it relates to July’s policy meeting, there was nothing in the statement to signal a taper was imminent, although we are certainly flagging this as a non-trivial possibility depending on how June jobs numbers shake out and if/how the Fed alters its policy stance next week. A strong and broad-based bounceback in employment combined with a less accommodative Fed would certainly give the BoC more comfort in stepping down the pace of its bond purchases once again.”
“As for the policy rate, it’s unlikely July will bring a change in forward guidance but we continue to flag the BoC’s less flexible policy mandate and upside risks to output gap closure as drivers for a rate hike earlier in its forward guidance “window” (i.e. in Q3 rather than Q4).”