BoC to hold rates and reiterate neutral policy bias at tomorrow's policy meet

BoC meets on Wednesday, 13th April to decide monetary policy. The central bank is expected to keep policy rate unchanged at 0.50% and reiterate its neutral policy bias. The focus at the meeting is likely to be on the Monetary Policy Report, as it will include an analysis of the impact of the fiscal stimulus on the economic outlook.

At the 9 March meeting the BoC left its policy rate unchanged at 0.50% and noted “the risks to the profile for inflation are roughly balanced” and that “the Bank’s Governing Council judges that the current stance of monetary policy is appropriate.

In the wake of recent upbeat data, growth projections may be revised higher. Stats Canada reported Friday that Canadian employment rose by 40,600 in March, well above MNI's median of 5,000 and compared to a decline of 2,300 in February. Also last week, Canadian building permits rose by 15.5% in February, erasing the 9.5% drop seen in January. Housing starts were 204,251 SAAR in March down from 21,9,077 units in February but above MNI's median of 190,000.

"The Bank of Canada may revise up its GDP forecasts in light of recent economic data and the more stimulative budget," said analysts at Brown Brothers Harriman.