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Oil in 2025

• The threat of trade wars makes forecasting the oil price this year unusually hazardous. However, based on the ‘known knowns’, one can safely assume that the downward pressure we saw through 2024 will persist. My forecast for Brent crude on 31 December is, therefore, USD65 per barrel.

By Alastair Newton

Canada: 50bp Rate Cut To 3.25% (Consensus 3.25%) in Dec-24

• The Bank of Canada reduced its policy rate by 50 basis points to 3.25%, continuing its easing cycle to support growth as inflation stabilises near the 2% target, broadly in line with expectations.
• Future rate decisions will hinge on trends in inflation, labour market conditions, and global risks, including reduced immigration targets and potential US tariffs, which introduce structural and external uncertainties.
• The Bank has adopted a cautious, data-dependent approach to further rate cuts. It aims to balance economic stimulus with inflation control while monitoring the effects of monetary easing on household demand and economic slack.

Canada: 50bp Rate Cut To 3.75% (Consensus 3.75%) in Oct-24

• The Bank of Canada reduced the policy rate by 50 basis points to 3.75%, consistent with the consensus forecast, as inflation stabilised near the 2% target, allowing for further easing to support demand.
• Future policy decisions will be heavily influenced by the pace at which excess supply in the economy is absorbed, particularly in the labour market, where unemployment remains elevated at 6.5%.
• While further rate cuts are expected, the Bank has emphasised a cautious, data-dependent approach, with the timing and extent of cuts contingent on inflation and domestic demand developments.

Canada Policy Interest Rate 4.25% (consensus 4.25%) in Sep-24

• The Bank of Canada reduced the policy rate by 25 basis points to 4.25%, in line with expectations, marking the third consecutive rate cut as inflation continues to ease.
• Canada's economy grew by 2.1% in Q2 2024, but signs of weakening activity and rising unemployment highlight challenges ahead. Inflation fell to 2.5%, with shelter costs remaining a key driver.
• Further rate cuts are possible if inflation continues to decline as expected. Still, the Bank remains vigilant about potential risks, balancing the need to support growth with its commitment to price stability.