06:59 AM EDT, 10/24/2024 (MT Newswires) -- The Bank of Canada was extraordinarily careful to not promise a quick follow-up to Wednesday's super-sized 50bsp rate cut, noted Bank of Montreal (BMO).

While Governor Tiff Macklem suggested further trims could be expected, the tone "definitely" lacked urgency, said the bank.

Canada's central bank cited at least two upside risks to inflation: 1) still-hot wages at a time of zero productivity growth, and 2) the risk of a housing market flare-up, especially with easier mortgage rules coming into effect in December.

BMO pointed out it would offer a couple more. First, the Canadian dollar (CAD or loonie) is flirting with 20-year lows at 72.2 cents. It briefly careened lower when oil prices crashed in early 2016, and again during the pandemic in 2020, but aside from those extremes, it hasn't been notably lower since 2003.

Second, while many are suggesting rates are still in the restrictive

zone, that's not entirely obvious. Real rates were indeed

consistently negative in the aftermath of the Global Financial Crisis but that was far from normal.

Looking further back, current real short-term rates of roughly two ppts were far from abnormally high. Financial conditions are actually quite favorable overall, whether it's solid equities, a weak loonie, or the drop in short- and long-term rates in the past year, added the bank.