BoC Interest Rate Decision (March 2019)


Posted on: 2019-03-05 (Day) By BCR Market Event


 

The Bank of Canada will be announcing its cash rate decision on 6th March 2019. Bank of Canada left its cash rate at 1.75% with a dovish message in January. The USDCAD pair sharply declined following the announcement. For March’s decision meeting, the market is widely expecting the cash rate to remain unchanged at 1.75%.

Canada Interest Rate (%)

 

 

BoC Interest Rate Announcement History

 

Date                      Previous              Consensus          Actual

06 Mar 2019       1.75%                   1.75%

09 Jan 2019         1.75%                   1.75%                  1.75%

05 Dec 2018        1.75%                   1.75%                  1.75%

24 Oct 2018         1.5%                     1.75%                  1.75%

05 Sep 2018        1.5%                     1.5%                    1.5%

11 Jul 2018          1.25%                   1.5%                    1.5%

30 May 2018       1.25%                   1.25%                  1.25%

18 Apr 2018        1.25%                   1.25%                  1.25%

07 Mar 2018       1.25%                   1.25%                  1.25%

11 Jan 2018         1.0%                     1.25%                  1.25%

 

 

Opportunities can be found in the statement

 

Gross Domestic Product (GDP)

The Bank projects real GDP will grow by 1.7 per cent in 2019, 0.4 percentage points slower than the October outlook. This revised forecast reflects a temporary slowing in the fourth quarter of 2018 and the first quarter of 2019. This will open up a modest amount of excess capacity, primarily in oil-producing regions. Nevertheless, indicators of demand should start to show renewed momentum in early 2019, leading to above-potential growth of 2.1 per cent in 2020.” Referring to BoC’s Monetary Policy Report – January 2019.

The Gross Domestic Product (GDP) in Canada expanded 1.6% in the Q4 2018, the data is formed a downward trend since Q2 2017. The central bank is forecasting the GDP growth to average around 1.7% over 2019. The slowing down of GDP growth was mainly affected by the oil price drop. The sloping down of GDP is enough to justify the rate cut, but it is unlikely to come before 2020.

Canada GDP Annual Growth Rate (%)

 

Inflation (CPI)

“Core inflation measures remain clustered close to 2 per cent. As expected, CPI inflation eased to 1.7% in November, due to lower gasoline prices. CPI inflation is projected to edge further down and be below 2 per cent through much of 2019, owing mainly to lower gasoline prices. On the other hand, the lower level of the Canadian dollar will exert some upward pressure on inflation. As these transitory effects unwind and excess capacity is absorbed, inflation will return to around the 2 per cent target by late 2019.” Referring to BoC’s Monetary Policy Report – January 2019.

CPI inflation fell to 1.4% in January from 2% in the previous month and slightly below market expectations of 1.5%, due to some temporary factors. Inflation is expected to fade in early 2019 and then remain close to the 2% target through the end of 2019.

Canada Inflation Rate (%)

 

Unemployment Rate

A worse-than-expected jobs report was released in January, the Unemployment Rate rose to 5.8% from 5.6% in the prior month. Household spending dampened further by slow growth in oil-producing provinces. Wage growth remains moderate. While the Unemployment Rate is around an average level, the bank’s ongoing view that the elevated level of household debt.

Canada Unemployment Rate (%)

 

 

Technical View

The loonie is declining ahead of BoC rate decision meeting. The USDCAD is continuing climbing up from bottom of the upward channel. In the daily timeframe, MACD is regaining its bullish momentum and RSI is moving close to the overbought territory. The pair breached the MA system to show its long order. Focus on 1.3385 barrier for further movement. Also, keep eyes on the oil price which will affect the loonie.

USDCAD D1 Chart