The Bank of Canada is expected to cut rates by 25 basis points at its 5 June 2024 meeting, which will take its key rate to 4.75%.
Saxo Invested reports markets have priced in 80% probability of a rate cut, with inflation back in target range of 1% to 3% and growth risks magnifying.
“The big test will be whether the BOC (Bank of Canada) is ready to diverge from the Fed, and comments from Governor (Tiff) Macklem will be on watch,” Saxo says.
The BOC carries out monetary policy by influencing short-term interest rates. It does this by adjusting the target for the overnight rate on eight fixed dates each year. –
The last fixed date was 10 April in which the target remained 5% – unchanged since 7 June 2023 when it was raised 25 basis points from 4.75%.
also known as the key policy interest rate, the target for the overnight rate, is the interest rate that the Bank expects to be used in financial markets for one-day (or overnight) loans between financial institutions.
This key rate serves as the benchmark that banks and other financial institutions use to set interest rates for consumer loans, mortgages and other forms of lending.
Write to Adam Orlando at Mining.com.au
Images: Saxo
