Bank of America: The Central Bank of Canada is expected to keep Intrerest Rate unchanged, and the forward guidance is not expected to be adjusted

Bank of America expects the Central Bank of Canada to keep the overnight Intrerest Rate unchanged at 5.0% and will not adjust its forward guidance. Wages rose by 5.7% year-on-year in December, despite a looser labour market due to weaker economic activity in Canada. The Central Bank said wage growth of more than 4.0-5.0% could hinder price stability. What the bank is looking for is a sustained and significant decline in core inflation, but this goal has not yet been achieved. Given the different inflation trends and rate cut expectations in the U.S. and Canada, Canadian Treasuries are likely to outperform U.S. Treasuries. On the FX front, Bank of America expects USD/CAD to have a short-term fair value of 1.34-1.35, with the Canadian dollar expected to appreciate later this year.
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