From chips to cloud: AI’s golden era is just starting, says Wedbush’s Ives
The Bank of Canada is comfortable to carry on with the current 1.75% overnight rate target for the time being, citing notably that CPI inflation measures are close to the 2% target.
Financial markets perceived a dovish tone in the statement issued Wednesday morning as the BoC focuses on the negative implications related to the weakening global momentum. The softening in Canadian business investment and exports triggered by global trade conflicts and the associated uncertainty is not new. In our view, the BoC will need to see more cracks in the Canadian economy relative to the new Monetary Policy Report projections to consider easing monetary conditions.
The Monetary Policy Report base case scenario still pegs real GDP growth forecasts close to potential in 2020 (1.7% instead of 1.9%) and 2021 (1.8% instead of 2.0%) even though the outlook was revised down. Clearly, a decoupling between Canada and the rest of the world cannot exist despite the cited good news relative to the pickup in most housing markets and solid household income growth.
In summary, today’s statement sounds slightly more dovish than the Sept. 4 statement but not enough to revisit our current forecast. We still see no change to the overnight rate through 2020 unless the global macroeconomic picture deteriorates much further.
Later today, the financial markets will find out if the Federal Reserve is willing to continue its “mid-cycle adjustment” beyond today’s expected 25bps rate cut.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.
Which stock should you buy in your very next trade?
With valuations skyrocketing in 2024, many investors are uneasy putting more money into stocks. Unsure where to invest next? Get access to our proven portfolios and discover high-potential opportunities.
In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. That's an impressive track record.
With portfolios tailored for Dow stocks, S&P stocks, Tech stocks, and Mid Cap stocks, you can explore various wealth-building strategies.
