BoC Rate Decision: Don’t Rule Out a Cut Today, Warns ING

BoC Rate Decision: Don’t Rule Out a Cut Today, Warns ING

ING Says a Rate Cut from BoC Is Still on the Table

The Bank of Canada (BoC) could still surprise markets with a 25 basis point cut during today’s policy meeting, according to ING analysts Ewa Manthey and Warren Patterson. While consensus has shifted toward a rate hold, ING believes that downside risks — including trade-related headwinds — support a cautious tilt toward easing.

Market Expectations May Underestimate Cut Risk

The CAD Overnight Index Swap (OIS) curve currently prices in just a 25% chance of a rate cut, but ING believes this is too low. They argue that Canada's exposure to US steel and aluminum tariffs, particularly following the latest increases by President Trump, adds substantial downside risk.

🗣️ “This meeting is a coin toss,” ING wrote. “We are slightly leaning toward a cut based on economic fundamentals, even if the BoC hesitates on optics.”

Even a Hold May Come with a Dovish Signal

Should the BoC decide to hold rates, ING expects a dovish tone to accompany the decision. This could align with market pricing for 16bps of cuts in July and a total of 38bps by year-end, which ING still sees as potentially too conservative.

ING also noted that the Canadian dollar (CAD) remains their least preferred G10 currency, citing its sensitivity to US economic weakness and recent macroeconomic divergence.

Internal Links:

• BoC Rate Monitor Tool
• CAD/USD Real-Time Chart
• Impact of Tariffs on Canadian Economy