March rate cut becomes less likely

March rate cut becomes less likely

March rate cut becomes less likely Governor of the Bank of Canada Stephen Poloz spoke in London, Ont. Tuesday about reinventing central banking but he also tipped his cards about the possibility of a further rate cut next month.

One phrase, in particular, from the talk has cut the odds of a further overnight rate cut from 72 per cent to 38 per cent, according to the National Post.

“…the downside risk insurance from the interest rate cut buys us some time to see how the economy actually responds,” Poloz said, according to the Post.

Several economists have predicted another 25 basis point cut is on the horizon from the central bank, with some believing that move will come at the BoC’s next rate announcement.

Still, many of those same economists got it wrong last time.

According to a Bloomberg news article about the rate cut, none of the 22 economists who took a Bloomberg news survey predicted late January’s rate cut.

“Another curve ball from Bank of Canada Governor Poloz has sharply reduced the odds of a rate cut at next week’s meeting,” BMO senior economist Benjamin Reitzes wrote after Tuesday’s speech. “That inserts a lot more uncertainty into next week’s policy meeting, making a potential rate cut a toss-up. Indeed, there’s a solid chance the BoC holds its fire next week and waits until it has a fresh forecast and a bit more information in April.”