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Nomura Previews Next Week's Bank of Canada Policy Meeting

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Nomura said it expects the Bank of Canada to keep rates unchanged, including the policy interest rate at 2.25%, at next week's policy meeting.

Canada's central bank is slated to release its policy statement at 9:45 a.m. ET on Wednesday.

Data released since the April meeting has been dovish, noted Nomura.

Labor markets have continued to cool, core inflation has remained within the BoC's target range and Q1 gross domestic product fell short of expectations.

BoC Governor Tiff Macklem is likely to acknowledge softer domestic demand, but avoid putting excessive weight on the "technical" recession label, stated the bank.

Nomura estimates the governor to reiterate data dependence and refrain from signaling the direction of the next move.

Downside risks to growth from geopolitical uncertainty and USMCA trade deal renegotiations persist, added the bank. With labor markets softening and inflation contained, Nomura predicts the BoC to maintain an accommodative stance and keep rates unchanged through 2026.

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