Original title: outlook: central Bank of Canada is expected to maintain stability in July, bond purchases may be reduced to US $2 billion
At 22:00 on Wednesday, Beijing time, the Bank of Canada will release the interest rate resolution and monetary policy report. At 23:00, Bank of Canada Governor McClum will hold a press conference. Nine investment banks have issued their outlook on this. The central bank is expected to announce that the policy interest rate will remain unchanged at 0.25%. More importantly, it is expected to reduce weekly asset purchases to 2 billion.
The details are as follows.
TD Securities
The outlook looks bright, but growth is likely to be lower than the Bank of Canada's high forecast since April. We do not expect any change in the forward guidance, and the Bank of Canada still said it expected the economic weakness in the second half of 2022 to be fully digested (and interest rates will rise). It is also expected to reduce bond purchases again, from $3 billion a week to $2 billion.
Royal Bank of Canada
There will be no major changes in the Bank of Canada's interest rate decisions and monetary policy reports. In fact, the progress of the Canadian economic recovery is basically in line with the central bank's expectations, suggesting that the forecast for GDP growth in April should remain basically unchanged. Despite the virus epidemic in the spring, we expect GDP to grow by 3.5% in the second quarter, in line with a recent forecast released by the Bank of Canada.
Given that the performance of the Canadian economy is largely in line with expectations, we expect the Bank of Canada to slow the pace of asset purchases this month. Soaring housing costs and a rebound in falling prices in the early stages of the pandemic, particularly energy prices, have boosted overall CPI growth by 3.5 per cent year-on-year in April and May. We expect the average in the third quarter to remain above the high end of the central bank's 1% Murray 3% target range.
Although the figures are higher than expected, policymakers at the Bank of Canada are likely to continue to believe that the recent price surge is temporary. So far, the main reason for the price rise is to push the price level back to the trend before the pandemic. Policy rates or forward-looking guidance schedules are not expected to change, and the central bank is expected to maintain extremely low policy rates until the second half of 2022.
Dutch InternationalGroup
The Bank of Canada will announce that it will once again scale back its quantitative easing asset purchases, reducing its weekly purchases from $3 billion to $2 billion. This will be
The scale of QE was scaled back for the third time, with an initial purchase of $5 billion a week.
However, the very successful vaccine program in recent months, coupled with a strong
The rapid rebound in markets and employment means that the economy will grow strongly and inflation will be above target for a long time. We expect the bank to reiterate that it will start raising interest rates in the second half of next year.
National Bank of Canada Wealth Management
The Bank of Canada will release its monetary policy report in July, accompanied by a series of revised economic forecasts. Unlike the MPR in April, however, the change should be relatively modest (except for the possible introduction of labour market factors). The overall real GDP growth outlook looks roughly in line with earlier guidance, but we should see inflation expectations raised.
Nevertheless, the Bank of Canada is fully expected to continue to point out that inflationary pressures are largely temporary. Overall, supported by strong job growth, encouraging business outlook surveys and solid progress in the vaccination campaign, the statement, MPR and subsequent McCleme press conferences are likely to remain cautiously optimistic.
As for policy changes, we expect another $1 billion in quantitative easing to reduce weekly purchases from $3 billion to $2 billion. As for the forward-looking guidance on policy rates, given that the outlook for economic growth remains roughly unchanged, no change is expected, meaning that the final rate hike will continue to depend on the weak absorption of the economy, according to the Bank of England, this will be sometime in the second half of 2022 (or sometime? ) appears.
Brown Brothers Harriman
The latest macroeconomic forecasts will be released at this meeting. At its most recent meeting on June 9th, the Bank of Canada decided not to make any changes. However, the bank said at the time that it would adjust its quantitative easing programme based on its continued assessment of the strength and durability of the economic recovery, suggesting that the Bank of Canada is likely to scale back its bond purchases further as the recovery continues.
Imperial Commercial Bank of Canada
The Bank of Canada's statement or Governor McClum's speech will not trigger any market volatility, even if it is possible to further reduce the size of bond purchases. If it uses the meeting to cut another $1 billion a week, people will think that this is just a continuation of the path it has already taken.
Mitsubishi UFJ FinanceGroup
The Bank of Canada is expected to raise interest rates several times from next year. There is no reason to expect the Bank of Canada to change its interest rate guidance at policy meetings and start raising rates in the second half of 2022. However, we do expect the Bank of Canada to announce a reduction in QE to $2 billion a week.
Citibank
Asset purchases will be scaled back again at this week's meeting, from $3 billion to $2 billion a week. At the meeting in October, the size of purchases will slow further to 1 billion.
The December meeting announced that zero purchases would be achieved by the end of 2021. However, the market has expected the Bank of Canada to take a tough stance, and the Bank of Canada is now expected to raise interest rates sharply in 2022, and a "neutral" statement may come as a mild surprise.
Dutch cooperative bank
The Bank of Canada will leave the policy rate unchanged at 0.25 per cent, reduce the minimum rate of asset purchases to $2 billion a week, and then cut another $1 billion at its October meeting to $1 billion in 2022. We will see a new monetary policy report and a new set of economic forecasts that are likely to revise growth and growth higher in 2021.Inflation. The overall tone of the statement is expected to be similar to that of June, with a "cautiously optimistic" view of the economy.