TORONTO, May 17 (Reuters) – The Bank of Canada would be
willing to cut interest rates three times ahead of the Federal
Reserve’s first move before a declining currency threatens to
endanger the inflation outlook, the median estimate of seven
analysts in a straw poll showed.
A weaker Canadian dollar versus the greenback this year has
sparked debate among investors about how much the BoC would be
prepared to diverge from its U.S. counterpart.
Investors expect the Canadian central bank to begin rate
cuts in June or July, with next Tuesday’s inflation reading seen
as a key input. But the Fed is seen on hold until September,
even after cooler-than-expected U.S. inflation data on
Wednesday.
The BoC’s benchmark interest rate, at 5%, already sits 38
basis points below the midpoint of the range set by the Fed for
its policy rate. Further widening in the differential could add
to pressure on the…
