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2025-10-28 18:35:10
Bank of Canada Rate Cut Concern: Data Divergence May Limit Canadian Dollar Losses] ⑴ The market expects an 83% probability of a 25 basis point rate cut by the Bank of Canada on Wednesday, but 11 of 34 economists still predict no change, reflecting uncertainty surrounding the decision. ⑵ If a rate cut is implemented, the policy rate will fall to 2.25%, hitting the lower limit of the Bank of Canada's neutral interest rate range. Sustained above-target inflation could trigger resistance from policymakers to further easing. ⑶ Bank of Canada Governor Macklem may adopt a wait-and-see approach and avoid issuing explicit forward guidance, which will limit the Canadian dollar's downside—the market is currently pricing in a cumulative rate cut of 35 basis points by January of next year.
