Bank of Canada Poised to Follow Fed With Rate Cuts, Traders Bet
- Swaps market singals possible interest rate cut in October
- Canada economy is performing within expectations, RBC says
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The Bank of Canada is likely to join the U.S. Federal Reserve with an interest rate cut this year to deal with the fallout from rising trade tensions, according to trading in the swaps market.
Investors are betting Canadian policy makers will follow an expected U.S. rate cut in September. The chances of a Bank of Canada match at the Oct. 30 meeting jumped above 50% Tuesday, up from about 25% last week, according to data compiled by Bloomberg. The market is implying 20 basis points of easing over the next six months. The odds of a cut soared after U.S. President Donald Trump threatened to impose tariffs on Mexican products to stem illegal immigration, raising concerns about the ratification of the revised North America Free Trade Agreement.