TD Securities sees the Bank of Canada’s decision on Wednesday as a fairly straightforward affair—developments since the October Monetary Policy Report have been broadly supportive of the Bank’s outlook, with lower oil prices and a lower Canadian dollar providing roughly offsetting shocks to the Canadian economy.
“As our preview highlights, the biggest uncertainty heading into 2016 may well be the impact of Fed tightening on Canadian long-term rates”.
“Even if oil prices don’t go much lower from here, tighter financial conditions from the Fed’s tightening could force a rapid pivot on the Bank of Canada’s part”.