The BoC leaves the door open for further policy normalization - NBF
|Analysts at NBF explained that the central bank’s decision to raise rates was largely expected by markets.
Key Quotes:
"The economy is at capacity, inflation pressures are on the rise, and real rates remain negative, which all warrant further tightening of monetary policy. In that regard, an October rate hike is possible if the BoC’s forecasts for growth pan out. That said, the central bank made clear it is data dependent and hence nothing is cast in stone."
"Note that the BoC cautioned about rising trade protectionism which have arguably raised downside risks to the economy. The U.S., which last month imposed tariffs on imports of steel and aluminum, is now threatening additional trade barriers. Tariffs on autos for example, which are now being considered by the Trump administration ─ public hearings held by the U.S. Department of Commerce take place next week ─, would have unambiguously devastating economic impacts if enacted."
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