The focus is on whether the Bank is ready to deliver a Fed-like dovish pivot. We think it may be too early for a radical shift in the policy message.

While the hawkish bias should be softened and the discussion on rate cuts opened, we think the BoC will fall short of the dovish stance expressed by the Federal Reserve in December. 

Expect the policy message to include concerns about the path of inflation and readiness to keep policy restrictive for longer if necessary. 

Markets are pricing in around 110 bps of easing by the BoC in the next 12 months: we suspect today’s meeting will fail to endorse those expectations, and CAD can find some moderate support. Still, we expect USD/CAD to find good demand below the 1.3400 mark.