1. The Bank of Canada is anticipated to maintain its current interest rates during this week’s meeting, marking the sixth consecutive session without any changes.
2. Economists emphasize their focus on the central bank’s accompanying statement and its latest Monetary Policy Report, set to unveil updated economic forecasts.
3. Forecasts suggest the Bank will keep its overnight target rate at 5.00%, consistent since July. However, there’s a growing confidence among markets and economists that a rate cut might be imminent in June.
4. Bond markets reflect an 88% probability of a 25-basis-point rate cut at the upcoming June 5 meeting, spurred by the recent March employment report indicating a rise in the country’s unemployment rate.
5. According to a CMT poll on LinkedIn, nearly half of the respondents foresee a rate cut in June, while 30% believe it might happen later, possibly in September.
6. During Wednesday morning’s rate decision release, market attention will shift towards any alterations in language within the Bank of Canada’s statement.
7. Economists from National Bank anticipate the acknowledgment of improved indicators such as wage growth, inflation expectations, and corporate pricing behavior in the statement.
8. The Bank may adjust its ‘forward guidance’ paragraph to reflect recent developments, potentially signaling a path towards easing at future meetings.
9. The updated economic forecasts in the Monetary Policy Report, to be released on Wednesday, will include revisions to the neutral rate, expected to increase to a range of 2.25% to 3.25%.
10. The neutral rate, critical for balancing the economy at full employment and stable inflation, remains a primary objective for the Bank of Canada.
11. While there are suggestions for a potential 50 bps increase in the target range, gradualism in central bank actions might lead to a more conservative adjustment of 25 bps.

Expert Opinions:

Inflation:

12. National Bank observes encouraging trends in recent inflation data, potentially indicating a shift in core inflation momentum.
13. Scotiabank suggests risks to inflation are tilted upwards due to economic momentum, strong wage growth, and supply chain challenges.
14. Desjardins raises concerns about the Bank of Canada possibly maintaining restrictive monetary policies for too long, suggesting biases in core inflation indicators.

Rate-cut Expectations:

15. RBMO sees the March employment report as adding pressure towards potential rate cuts, leaning towards a June decision.
16. Scotiabank maintains the view of rate cuts in September for Canada, with the Fed expected to cut rates more rapidly than the Bank of Canada.

BoC Rate Statement:

17. National Bank anticipates the acknowledgment of improving indicators in the Bank’s rate statement, potentially paving the way for future easing measures.
18. Dave Larock speculates that the Bank of Canada might maintain a hawkish stance, emphasizing the need for policy rate stability amidst market optimism.

Labour Market:

19. RBC Economics notes that despite challenges, the labor market hasn’t declined to a point necessitating immediate rate adjustments.
20. TD Economics suggests that despite recent economic clouds, the Bank of Canada is likely to maintain its patient approach based on strong data outside the weak employment report.