From a Toronto Dominion note to clients, begins with what Adam has already covered … cut was a surprise … oil price shock increases both downside risks to the inflation profile and financial stability risks … intended to provide insurance.
The note then goes on (bolding mine):
- “While the Bank of Canada has taken out a quarter-point insurance policy in the face of the oil price shock, TD does not believe that this is a start of a rate cutting cycle.
- Oil prices are likely to head higher in the second half of the year, and with increased momentum in the U.S. economy, Canada’s economy is expected to weather the oil price shock, with the Bank of Canada’s own growth expectations for 2016 revised up slightly”.
Meanwhile … no-one in Asia seems to give a rat’s about the bank of Canada … USD/CAD barely moving today:
