Scotiabank Sees Bank of Canada Cutting Rates Wednesday With "Neutral-Hawkish" Bias

08:12 AM EDT, 10/29/2025 (MT Newswires) -- The Bank of Canada is expected to cut 25bps on Wednesday, with all major shops in that camp and about 90% of a cut priced, said Scotiabank.

The policy statement, Monetary Policy Report and Governor Tiff Macklem's written opening remarks to his press conference arrive at 9:45 a.m. ET and will be followed by the press conference at 10:30 a.m. ET on Wednesday.

The bank doesn't expect material developments around other policy instruments with CORRA coming back to be more in line with the overnight rate. Guidance is expected to be "neutral-hawkish," data dependent and highly measured.

Macklem has pledged to return to providing base case projections in this MPR because he says uncertainty has gone down. Scotiabank doesn't agree.

Watch for any signals in the medium-term inflation projections, stated the bank. The reason the BoC is easing now is primarily to take out insurance against downside risk to sustainably achieve its 2% target, which the central bank roughly showed in the 'current tariff' scenario in the July MPR. If the BoC revises down despite a pair of recent cuts then it could be because it's biased toward more.

Scotiabank advises to take whatever forecasts the BoC models spit out with a "mountain of salt," given the track record of various MPRs compared with actual inflation. The BoC misses inflection points and routinely over-and undershoot for lengthy periods.

Forecasting is more art than science and heavily driven by judgment, added the bank. As the five-year review beckons, the differentiating factor in the BoC's policy success going forward will rest upon improving judgment rather than fussing over which one of a bazillion current and possibly additional measures of core inflation may be the best.

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