WAAC Perspectives

The Bank of Canada ("the BoC") has seen better-than-expected inflation prints over the past two months, increasing the likelihood that it will begin to reduce its policy rate in the summer. In previous easing cycles, bonds have generated positive returns as interest rates have fallen in the months leading up to the first rate cut. Given the modest rise in interest rates year-to-date, we anticipate that the lead-up to the BoC's first policy rate cut later this year will exhibit similar patterns to historical easing cycles.