Canada BoC: Downward revision likely in July GDP growth, possible rate cuts in Q3

After this week's disappointing Canada's GDP data for April, it will be very difficult for GDP growth in Q2 to meet the projections that the Bank of Canada made in April. The same is true for Q1. 

This means that the insurance taken out in January (a 25 bps rate cut) to cushion the negative impact of low oil prices on the Canadian economy may no longer be sufficient.  The Canadian economy has shown negative GDP growth in each of the first four months of the year. On July 15, the Bank of Canada will update its projections and a downward revision for GDP growth seems likely, says Rabo bank. 

This would set the stage for a 25bps rate cut. This cut is expected to be made in Q3, most likely in July. After this cut, the Bank is expected to remain on hold, added Rabo bank.