What to expect from the Bank of Canada

It’s a busy week in Canadian business, with more banks releasing second-quarter results, a Bank of Canada rate announcement and StatsCan releasing GDP numbers.

Here are the highlights:

Scotiabank results

The Bank of Nova Scotia will release its second-quarter results on Tuesday. The bank’s CEO recently pushed back at renewed bets against Canada’s banking sector and the risk posed by the housing market, saying that the lender has “a lot of buffer” in the event of a significant downturn.

Last week, Royal Bank of Canada and TD Bank Group beat analysts’ expectations, while the Canadian Imperial Bank of Commerce fell short on sluggish loan growth.

Rate announcement

The Bank of Canada will makes its latest interest rate announcement on Wednesday. The central bank’s recent financial system health report included climate change as an important vulnerability for the first time, elevating it to a category alongside its long-running worries about household debt and apprehension about the housing market.

In a research note last week, CIBC Capital Markets chief economist Avery Shenfeld said negative global factors—from U.K. Prime Minister Theresa May’s resignation to the U.S.-China trade war—offset signs that the Canadian outlook is improving.

While Statistics Canada will likely report Q1 growth below 1% on Friday, “solid momentum readings for March GDP and a huge gain in April employment suggest that Q2 could handily top the central bank’s 1.3% projection,” Shenfeld wrote. “As a result, talk about a Bank of Canada rate cut this year looks premature.”

With inflation around the BoC’s 2% target, governor Stephen Poloz should maintain his “pat stance on interest rates for 2019,” Shenfeld wrote.

“Expect little market reaction to a statement filled with ‘on the one hand, on the other hand’ language.”

SNC-Lavalin in court

A Quebec judge will determine if the criminal case against SNC-Lavalin proceeds on Wednesday. The Montreal-based company recently cancelled the sale of part of its stake in 407 International Inc. to the OMERS pension plan, but will sell the stake to one or both of the other owners of the Ontario toll highway.

Former cabinet ministers Jody Wilson-Raybould and Jane Philpott, who resigned from their ministerial positions over the SNC-Lavalin controversy, are holding press conferences Monday to announce their political plans.

BMO earnings

BMO Financial Group will hold a conference call to discuss its second-quarter results on Wednesday. The bank’s CEO recently told reporters that economic growth in Canada is “moderating” but it’s “no screeching halt” and the risk of a recession in the coming year is relatively low.

Economic report card

Statistics Canada will release gross domestic product results for March and the first quarter of 2019 on Friday. The agency said last month that GDP pulled back 0.1% in February as both goods-producing and services-producing industries declined.

A Friday research report from National Bank Financial said GDP may have expanded 0.9% in the first quarter, adding that “the handoff to Q2 looks very good.” Consumption may contribute to higher GDP because of employment gains, while exports could be a drag.