for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up

UPDATE 2-Dealers confident on Bank of Canada rate pledge

 * Rates seen flat for rest of '09, in line with BoC pledge
 * Odds of quantitative easing seen at 35 pct or less
 (Adds response from additional primary dealer)
 TORONTO, June 1 (Reuters) - The Bank of Canada, sticking to
a recent pledge, will keep its benchmark interest rate
unchanged at 0.25 percent for at least the rest of the year,
Canada's primary securities dealers predicted on Monday.
 The central bank is set to make its next rate announcement
on June 4. At the last rate announcement in April it took the
unusual step of providing guidance on rates, saying the
overnight rate will stay at 0.25 percent until the end of the
second quarter of 2010, conditional on the inflation outlook.
 With the central bank's commitment in mind, 11 dealers
surveyed by Reuters forecast the Bank of Canada would keep the
overnight rate at 0.25 percent right through until at least the
end of this year. One dealer was unavailable.
 "We have it on hold for at least for a year, as the bank
itself has highlighted," said Carlos Leitao, chief economist at
Laurentian Bank Securities, echoing comments from other
dealers.
 The poll was conducted after government data showed
Canada's economy shrank 5.4 percent in the first quarter, at
the fastest pace since 1991, pushing the country into its
sharpest two-quarter downturn on record.
 Still, the numbers were well ahead of analysts' and the
Bank of Canada estimates on the first quarter contraction.
[ID:nN01454666]
 Market players will also monitor whether there will be a
change in the central bank's thinking about using nonstandard
ways to help the economy emerge from recession when it
announces the rate decision on Thursday.
 All dealers polled saw a low probability that the central
bank would engage in some form of quantitative easing --
printing money to buy market securities -- at some time over
the next 12 months.
 The dealers pegged the odds at 35 percent or less as
economic figures have shown improvement in recent weeks,
increasing the chances that the economy will right itself
without extra help from the central bank.
 The central bank has made no explicit commitment to taking
nonconventional measures to spur the economy, and has generally
talked down the idea.
 "The general perception that most people have on the North
American economy is that it's stronger than people were
expecting, so that's going to give them some peace of mind,"
said John Clinkard, chief economist at Deutsche Bank Canada.
 "So to adopt a nuclear tool is just not, I think,
appropriate at this time."
 Market watchers are also focused on whether the Bank of
Canada will address the recent strength in the Canadian dollar,
which has steadily climbed due to a combination of higher
prices for key Canadian commodities, some upbeat economic data
and lower demand for the U.S. dollar.
 The currency rallied 9.3 percent in May, its biggest
monthly gain since at least October 1950, according to Bank of
Canada data that dates back to 1950.
COMPANY                     JUNE     JULY     SEPT     YR END
                         ACTION   ACTION   ACTION   RATE
BMO CAPITAL MARKETS         NO MOVE  NO MOVE  NO MOVE  0.25
CASGRAIN & CO LTD           NO MOVE  NO MOVE  NO MOVE  0.25
CIBC WORLD MARKETS INC.     NO MOVE  NO MOVE  NO MOVE  0.25
DESJARDINS SECURITIES       NO MOVE  NO MOVE  NO MOVE  0.25
DEUTSCHE BANK SECURITIES    NO MOVE  NO MOVE  NO MOVE  0.25
HSBC SECURITIES             NO MOVE  NO MOVE  NO MOVE  0.25
LAURENTIAN BANK SECURITIES  NO MOVE  NO MOVE  NO MOVE  0.25
MERRILL LYNCH CANADA INC.   N/A      N/A      N/A      N/A
NATIONAL BANK               NO MOVE  NO MOVE  NO MOVE  0.25
RBC CAPITAL MARKETS         NO MOVE  NO MOVE  NO NOVE  0.25
SCOTIA CAPITAL INC.         NO MOVE  NO MOVE  NO MOVE  0.25
TORONTO-DOMINION BANK       NO MOVE  NO MOVE  NO MOVE  0.25
                         PCT CHANCE OF QUANT EASING WITHIN
                         12 MTHS
BMO CAPITAL MARKETS         35 PCT
CASGRAIN & CO LTD           25 PCT
CIBC WORLD MARKETS INC.     35 PCT
DESJARDINS SECURITIES       30 PCT
DEUTSCHE BANK SECURITIES    25 PCT
HSBC SECURITIES             10 PCT
LAURENTIAN BANK SECURITIES  25 PCT
MERRILL LYNCH CANADA INC.   N/A    
NATIONAL BANK               30 PCT
RBC CAPITAL MARKETS         20 PCT
SCOTIA CAPITAL INC.         25 PCT
TORONTO-DOMINION BANK       25 PCT
 (Additional reporting by Frank Pingue; Editing by Jeffrey
Hodgson)


for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up