Analysts at Westpac note that the Bank of Canada (BoC) has sat on the sidelines for almost a year, their policy rate steady at 1.75% since late October 2018, having raised it +125bp in the prior fifteen months.

• “The Bank is wary about the global outlook and escalating trade tensions, their latest statement noting they will, “pay particular attention”. But the Bank has made no mention about the possibility of cutting rates, BoC officials taking comfort in rebounding domestic activity.
• Against that background, the BoC has struck a neutral tone noting that, "…the current degree of monetary policy stimulus remains appropriate".
• Markets have got the message loud and clear, pricing in just 14bp in BoC easing to mid-2020, a notable outlier vs peers.
• The outcome of the federal election (21 Oct) won’t materially alter the outlook though at the margin sentiment could see a bigger lift if the more business-friendly conservative opposition wins.
• The BoC is anticipating a growth moderation in H2 but activity is likely to hold near trend, leaving the BoC content to maintain a steady policy hand further still into 2020.”