TD Securities analysts anticipate the Bank of Canada’s (BoC) March Summary of Deliberations will maintain a dovish tone, stressing excess supply and disinflation. They argue the BoC has ended its easing cycle and will hold the overnight rate at 2.25% through 2026, looking through higher headline inflation before hiking back toward neutral in early 2027.

Dovish minutes and extended policy pause

"We look for the Bank of Canada's Summary of Deliberations to maintain the more dovish tone from the March policy meeting by keeping an emphasis on the softer domestic backdrop and recent disinflationary progress, which should give the Bank more flexibility to look through stronger headline inflation over the near-term."

"The minutes should keep an emphasis on heightened uncertainty while noting there is more excess supply than projected in the Bank's forecasts from January and that inflation pressures are less broad-based after the recent deceleration in CPI-trim/median."

"We will be particularly focused on any discussion of risks to the near term rate path, and how long the Bank needs to determine whether higher energy prices are at risk of becoming more persistent."

"We believe the Bank of Canada has reached the end of its easing cycle and look for them to hold the overnight rate at 2.25% through 2026, before a return to neutral in early 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)