BoC: Upbeat assessment of growth - Westpac

The BoC gave a more upbeat assessment of growth and notably boosted their 2019 GDP growth projections from 1.6% to 2.1%, thanks to recent stimulus measures at the provincial and national level, according to Richard Franulovich.

Key Quotes

“But Poloz remains cautious, noting meaningful supply side enhancements forestall the need for immediate hikes. Backing that, the Bank raised their estimate of potential output growth from 1.6% over the next two years to 1.8%.”

“Market pricing through year’s end has taken a small hit, to now just less than +50bp in hikes. More immediately, it appears that we’d need to see an even stronger run of data than has already been the case, along with a mid-May “in principle” NAFTA agreement, for the BoC to lift rates at their May 30 meeting.”

“We throttle back our long held bullish CAD view, looking for 1.28-1.30 on a 1-3 month horizon.”