TSX futures slip ahead of BoC policy meeting

The Art Deco facade of the original Toronto Stock Exchange building is seen on Bay Street in Toronto, Ontario, Canada January 23, 2019. REUTERS/Chris Helgren/File Photo Acquire Licensing Rights

Oct 25 (Reuters) – Canada’s main stock index inched lower on Wednesday, but pared losses after the Bank of Canada forecast sluggish growth for the rest of the year while keeping interest rates steady even as it kept the door open for further rate hikes.

At 10:25 a.m. ET (1425 GMT), the Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE) was down 15.78 points, or 0.08%, at 18,970.71 and looked set for its sixth straight day of declines.

The Bank of Canada on Wednesday cut its 2023 growth forecast to 1.2% from the 1.8% it predicted in July.

The central bank held its key overnight rate at 5.0% as expected but was open to more rate hikes as it looks to tame inflation that could stay above its 2% target for another two years.

“The key here is BoC is probably not going to hike rates again, but they are not making the mistake they made earlier this year, suggesting that they’re on pause,” said Doug Porter, chief economist at BMO Capital Markets.

“They are really driving home the point that they still have a tightening bias, and any significant upside surprise on growth or inflation, could be met with further rate hikes.”

Heavily-weighted financial stocks (.SPTTFS) fell 0.6%.

Rate-sensitive technology stocks (.SPTTTK) dropped 1.3% and real estate stocks (.GSPTTRE) fell nearly 1%.

The yields on benchmark 10-year Treasuries gained some ground after slipping on Tuesday, further hurting rate-sensitive stocks.

Shares of Bank of Montreal (BMO.TO) fell 0.3% after Bloomberg News reported on Tuesday that the lender is exploring the sale of a portfolio of recreational vehicle loans, citing people with knowledge of the matter.

Reporting by Siddarth S in Bengaluru; Editing by Tasim Zahid

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