Institutions: The Bank of Canada is expected to test the limits of divergence from the Fed's policy

On June 17th, Jinshi data reported that the Capital Markets Fixed Income team at the Canadian Imperial Bank of Commerce (CIBC) stated that the Bank of Canada may test how much interest rates can be lowered if the Federal Reserve remains unchanged. Governor Macklem has stated that there is a limited policy divergence, but the Bank of Canada is "far from" approaching this threshold. CIBC stated: "This is an important step in conveying the depth of the Bank of Canada's easing cycle." CIBC believes that traders will bring forward their expected rate cuts for 2026 to next year. CIBC predicts that due to the increasing proportion of mortgage renewals at higher rates, the Bank of Canada will significantly lower interest rates, hoping to "preemptively address factors that may excessively weaken the economy."