But the jumbo rate cuts made at the end of last year are unlikely to be seen again anytime soon as the central bank balances inflationary concerns with the need to keep the economy growing. However, expectation of smaller cuts has been wrong before.
At CIBC Economics, Andrew Grantham said that inflation data will be harder to dissect when the January figures are known, as this will include a full month of the sales tax holidays, but he expects a 25 basis point cut from the BoC next week.
National Bank of Canada’s Matthieu Arseneau and Ethan Currie also believe a 25-point cut is incoming and, if Canada does manage to avoid President Trump’s 25% tariffs, lower rates could fuel above-potential growth for the economy.
TD Economics’ Leslie Preston agrees that 25bps is likely next month, to push rates further into neutral territory and provide something of a buffer for demand softness in the economy. Preston also says that the 25-point cuts will be the BoC’s decision at every other rate announcement this year.
Michael Davenport at Oxford Economics Canada said that inflationary pressures appear benign but noted that there will likely be inflation volatility ahead. He expects a 25bps cut on January 29.
