BOC: TD Now See April Rate Hold Post-GDP

Following Friday's slightly-stronger-than-expected January GDP data and flash forecast for flat growth in February, TD has pushed back their expectation for the next BOC cut to June from April. However, their outlook for 3x cuts remaining in the year still stands.

• They write: "The strong print for January and lack of appreciable damage to the economy in February tilt the odds decisively towards a pause in April. The Bank has recently argued that given extreme uncertainty, it may need to act more cautiously, functionally putting less weight on forward looking forecasts, and more weight on the data in hand. With that sort of a bias, we believe the Bank of Canada is more likely to leave the overnight rate unchanged at 2.75% in April. Upcoming US tariff announcements may well turn the market on its head once again, but at this point the economic data in Q1 has been too strong for us to ignore. Importantly though, this is pain delayed, not pain averted. We still think the BoC will need to cut three more times this year. We now look for 25bp cuts in June, July, and September."
• Current pricing for an April cut is around 8bp, or roughly 1 in 3 implied probability of a cut - it was closer to 10bp earlier in the day ahead of the GDP data and US President Trump saying he had an "extremely productive" call with Canada PM Carney on tariffs (Carney later said he told Trump Canada would implement retaliatory tariffs but that the countries would begin comprehensive negotiations after the Canadian election at end-April).