08:17 AM EDT, 10/25/2024 (MT Newswires) -- The Bank of Canada (BoC) cut its policy rate by 50bps to 3.75% on Wednesday, as widely expected, said UBS.

It's evident that with inflation close to target, the focus has shifted from inflationary risks toward growth risks, wrote the bank in a note to clients.

As the decision didn't come as a surprise, the Canadian dollar (CAD or loonie) took it in stride and traded very closely to the US dollar (USD), stated UBS.

Another "supersized" rate cut before year-end is likely, in the bank's view, which should increasingly push the CAD out of the high-yielding bucket.

UBS thinks it will hold up with the USD (1.38 year-end target), but increasingly underperform its commodity and high-beta peers.

Friday's Canadian retail sales at 8:30 a.m. ET and next week's gross domestic product data print should all but

confirm this notion, added the bank.