Citi discusses RBA and BoC policy path and expects the RBA to cut rates in August meeting, while sees the BoC on hold for now with the next move in rates likely up.
“Citi analysts see Australia Q1 GDP report last week making it more likely the economy underperforms against the RBA’s forecasts and expects RBA to 25bp cut in August. Despite the RBA Governor’s call for some policy burden to be carried by fiscal and structural policies, Citi analysts do not expect additional fiscal stimulus or structural reforms within a meaningful timeframe. Therefore, heavy lifting on policy will probably still need to be done by monetary policy,” Citi notes.
“Another month of solid Canadian jobs data in may following an exceptionally-strong April underscores consistent strength in the Canadian labor market likely to support a rebound in activity later this year and into 2020. Bottom Line – BoC on hold vs possible Fed rate cuts to support CAD vs USD,” Citi adds.