TORONTO (Reuters) -The Bank of Canada reduced its key overnight interest rate to 2.25% on Wednesday, as widely expected, and signaled a possible end to its cutting cycle.
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ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATES STRATEGY AT TD SECURITIES “It does seem as though they are likely done after this rate cut. We do think they will hold at 2.25%. It’s (on US trade policy) a very valid comment. Not only has the range of outcomes for the terms of trade become more uncertain, so too has the impact from the already in place, changes in the US-Canada trade relationship. The next two meetings, with the budget coming next week, it’s easier for the bank again to stay on hold, but we will need to see some improvement in growth in the first half of 2026 for the bank to remain on hold.”
DARCY BRIGGS, PORTFOLIO MANAGER, FRANKLIN TEMPLETON CANADA “They cut as we thought as they would, or should. There is a bit of mixed opinion in that there’s one side that thinks they’ve got to the bottom part of neutral and that’s as far as they need to go. We’ve always maintained a position that they’ll probably need to go to 2% so that would be one more cut coming. It could be December, it could be in early 2026.” “They’ve reiterated what our concerns have been. Canada is dealing with a double-negative income shock. First of all, we’re right in the teeth of the COVID mortgage reset cycle. So that’s the ultra-low mortgage rates that were issued during COVID that are coming up for renewal … And we’re dealing with a negative income shock on trade.”
(Reporting by Fergal Smith and Nivedita Balu; Editing by Caroline Stauffer)
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