Dual central bank interest rate decisions from the US Federal Reserve and the Bank of Canada on Wednesday top the week’s calendar, with the Bank of Canada expected to hold interest rates, while a third straight 25 basis point cut from the Fed looks highly likely, RBC economists Nathan Janzen and Claire Fan said.
Key trade data for Canada ahead of interest rate decision
“Our base forecast a month ago did not assume a Fed cut for December, given US inflation remains above the central bank’s 2% target, and Chairman Jerome Powell’s comments at the last meeting about proceeding cautiously in an uncertain environment. However, with an unusually divided FOMC panel, next week’s decision will always be a very close call. The Fed’s calls over the past few weeks have also been leaning toward a cut. And with some weaker data during the blackouts, we doubt hawks will “They will have a great battle.”
“The Bank of Canada’s hold on the comparison should be relatively uncontroversial. After the October rate cut, policymakers indicated that “the current interest rate is about the right level” to achieve low and steady inflation while supporting growth through uncertainty. Next week’s deferred Canadian trade data for September would need to show a 3.4% increase in the volume of goods exports from August, and a 3.1% decline in the volume of goods imports in order to match the details in last week’s third-quarter GDP data.
“More important are the US Census Bureau’s trade details on whether CUSMA exemptions continued to hold to support Canadian exports to the United States in September.”
