These are Important Things Traders Need to Know Ahead of the BoC Policy Decision!

<p>&nbsp;The Bank of Canada (BoC) is expected to keep overnight rates on hold on Wednesday and at the same time share new inflation and growth forecasts that should provide insight into the central bank's view of when borrowing costs might begin to ease.</p><p><br /></p><p>The BoC's governing body has kept rates on hold at three consecutive policy meetings after raising them in July to a 22-year high of 5.0%. Annual inflation in December was 3.4%, still higher than the central bank's 2% target but still below the June 2022 peak of 8.1%.</p><p><br /></p><p>"It cannot be denied that there has been progress in reducing inflation, however, it is clear that there is still a lot of work to be done to return to the 2% level," said Benjamin Reitzes, managing director and macro strategist at BMO Capital Markets.</p><p><br /></p><p>A rate cut is very likely in 2024, but the Bank of Canada will continue to watch inflation and expect inflation to decline further," he added.</p><p><br /></p><p><br /></p><p>Market players were expecting a 25 basis point cut in June after holding back bets on a cut in April after December's inflation data, which picked up from November.</p><p><br /></p><p>The BoC will keep rates on hold on Wednesday and at its next meeting in March, according to a Reuters poll of 34 economists. In the same survey, 12 analysts forecast that the first rate cut since March 2020 would come in April, while about two-thirds expected one in June.</p><p><br /></p><p>While inflation has kept interest rates steady, economic growth has slowed, and some economists warn that interest rates should be lowered in the short term to avoid a deeper recession.</p><p><br /></p><p>The BoC, in its latest outlook in October, said it expected inflation to return to its 2% target by the end of 2025 and forecast annual growth of 0.8% in the third and fourth quarters of last year.</p><p><br /></p><p>While keeping rates on hold, the BoC has so far maintained language in policy announcements that said they "stand ready to raise policy rates further if necessary."</p>