TD Securities expects the Bank of Canada to hold rates at 2.25% on October 28, defying market pricing for a 20bps hike and signaling potential short-term weakness for the Canadian dollar.
The Canadian dollar faces potential downward pressure as TD Securities anticipates the Bank of Canada will maintain its policy rate at 2.25% during the October 28 meeting. This outlook diverges from current market expectations, which have priced in approximately 20 basis points of tightening, suggesting a risk of currency depreciation if the central bank fails to meet these hawkish market projections.
TD Securities expects the Bank of Canada to hold the policy rate steady at 2.25%.
The market is currently pricing in approximately 20 basis points of tightening, which contrasts with TD Securities' expectation of no change.
TD Securities analysts Robert Both and Emma Lawrence forecast the Bank of Canada will maintain its policy rate at 2.25% during the October 28 meeting. This outlook diverges from current market expectations, which have priced in approximately 20 basis points of tightening, potentially pressuring the Canadian dollar.
The market is currently pricing in approximately 20 basis points of tightening for the October 28 policy meeting.
If the Bank of Canada chooses to hold rates at 2.25% rather than hiking as the market expects, the resulting policy divergence could lead to a decline in the Canadian dollar.