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Mar 06 - 06:55 PM

CIBC: Maintains June BoC Rate Cut Call After March Decision

By eFXdata  —  Mar 06 - 03:00 PM


CIBC reaffirms its expectation for the Bank of Canada (BoC) to initiate rate cuts in June, following the BoC's decision to maintain its policy rate at 5% in its March policy statement. The BoC's statement emphasized ongoing concerns over inflation persistence, particularly in shelter costs, while acknowledging some signs of wage pressure easing. CIBC interprets the absence of clear dovish indicators in the BoC's statement as a strategic choice to justify its current stance, rather than a signal of its future intentions.

Key Points:

  • The BoC's March statement focused on justifying its decision to maintain rates, citing a mix of economic factors including persistent inflation pressures and slight improvements in economic growth.
  • While the BoC noted some signs of wage pressure easing, it emphasized the need for more progress on inflation, particularly in non-shelter components of the CPI basket.
  • CIBC notes inconsistencies in wage inflation data and highlights the BoC's intention to continue monitoring a range of indicators beyond its two preferred core inflation measures.
  • The BoC's stance on quantitative tightening remains unchanged, with further details expected from Deputy Governor Tony Gravelle's upcoming speech.


CIBC interprets the BoC's March policy decision and statements as aligned with its expectation for a rate cut in June, contingent on further inflation progress. The emphasis on ongoing inflation concerns, particularly in shelter costs, suggests that rate decisions will continue to be data-dependent. CIBC remains attentive to upcoming jobs and CPI data, which will be crucial for fine-tuning forecasts and assessing the likelihood of a mid-year rate cut.

CIBC Research/Market Commentary


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