Instant View: Bank of Canada cuts benchmark rate by 25 basis points

TORONTO - The Bank of Canada on Wednesday lowered its benchmark interest rate by 25 basis points to 2.75%.

MARKET REACTION: [CAD/]

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COMMENTS

ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATES STRATEGY, TD SECURITIES

"My read is that they are going to remain very data dependent (and) that they will continue to ease if economic data starts to deteriorate. But they're not going to commit to a very robust easing path ahead of time, given the uncertainty about both the impacts of the trade tensions and how long the trade tensions will actually persist for."

DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS, SCOTIABANK

"I think they may be signaling they're done. The final paragraph was quite hawkish. They're saying in so many words that 2% (inflation) is their job and they're more worried about upside than downside risks to that target coming from the trade tensions with the United States."

DOUG PORTER, CHIEF ECONOMIST, BMO CAPITAL MARKETS

"The move itself was almost entirely expected. ... They're cutting because confidence has slipped in the face of a trade war, but they're certainly not promising a whole lot more. They have to wait to see how a trade war affects inflation. They're worried about both the downside risk to growth, but also the upside risk to inflation from higher tariffs. I think the key here is that they will proceed very cautiously from here. Our view is that if we're still in a full trade war, the bank will keep trimming."

(Reporting by Fergal Smith, Nivedita Balu and Anna Mehler Paperny; Editing by Caroline Stauffer)

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