What to expect from Bank of Canada

Market participants which monitoring Bank of Canada decisions expect the bank to keep interest rates at current levels at 1.0% again. Better employment data, however, could cause central bankers to reconsider their policies today and suggest any changes in the future.

After the booming growth in the first half of this year, GDP slowed to 1.7% yoy, mainly due to the country's declining exports, which grew by only 4.3% in the second quarter. As for the fourth quarter, market analysts expect to pick up again, but data covering the period will not be available until March, and they will not affect the current Bank of America decision.

Good labor market data and slowing economic growth will likely cause bankers to wait for interest rates to rise, and investors will turn their attention to Polo's statement right after the decision on the key interest rate.

Following the announcement of the new interest rate, we expect increased CAD volatility, and a possible increase in interest rates will see a very strong momentum in favor of the Canadian currency. After the interest rate decision follows a speech by Steven Polos, manager of Bank of Canada, where investors will look very carefully for signals on what the bank intends to do in the future.

Currently, the probability of raising interest rates is estimated at 16.1%. Here's what market analysts expect in the future:

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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