Bank of Canada to begin rising rates in July 2022 – Wells Fargo

Matías Salord FXStreet

The outlook of analysts at Wells Fargo, for the Bank of Canada monetary policy, is mildly more hawkish than the consensus. They expect an initial rate hike during the third quarter of 2022, compared to the consensus forecast which sees an initial rate increase in Q4-2022. They year-end 2023 target for the central bank's rate is 1.50%.

Key Quotes:

“We expect the Bank of Canada's (BoC) steady progress towards less accommodative monetary policy to continue in the coming quarters. Our outlook is for the central bank to end its quantitative easing program by early 2022. The BoC is currently purchasing Canadian government bonds at a targeted pace of C$2B per week. We expect a further slowing in bond purchases to C$1B per week to be announced at the October 27 meeting, and for the BoC to announce an end to the quantitative easing program at the January 26 meeting next year.”

“We also expect the Bank of Canada to begin raising its policy interest rates in 2022, starting with an initial 25 bps rate increase to 0.50% at the July 2022 monetary policy meeting and another 25 bps rate increase during Q4-2022. Regarding the initial rate hike, we believe the risks are tilted towards an earlier rather than later increase. We also see multiple rate hikes in 2023, and anticipate a cumulative 75 bps of tightening during that year.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

EUR/USD remains on the back foot below 1.1850

EUR/USD resumes its downtrend on Wednesday, navigating the area below the 1.1850 level in a context of modest gains in the US Dollar, while investors gear up for a slew of US data prior to the publication of the key FOMC Minutes.

GBP/USD defends 1.3550 after UK inflation data

GBP/USD is holding above 1.3550 in Wednesday's European morning, little changed following the UK Consumer Price Index (CPI) data release. The UK inflation eased as expected in January, reaffirming bets for a March BoE interest rate cut, especially after Tuesday's weak employment report.

Gold retains bullish bias amid Fed rate cut bets, ahead of Fed Minutes

Gold sticks to modest intraday gains through the early European session, reversing a major part of the previous day's heavy losses of more than 2%, to the $4,843-4,842 region or a nearly two-week low. That said, the fundamental backdrop warrants caution for bulls ahead of the FOMC Minutes, which will look for more cues about the US Federal Reserve's rate-cut path.

Pi Network rally defies market pressure ahead of its first anniversary

Pi Network is trading above $0.1900 at press time on Wednesday, extending the weekly gains by nearly 8% so far. The steady recovery is supported by a short-term pause in mainnet migration, which reduces pressure on the PI token supply for Centralized Exchanges. The technical outlook focuses on the $0.1919 resistance as bullish momentum increases.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Top 3 Price Prediction: Bitcoin, Ethereum, and Ripple face downside risk as bears regain control

Bitcoin, Ethereum, and Ripple remain under pressure on Wednesday, with the broader trend still sideways. BTC is edging below $68,000, nearing the lower consolidating boundary, while ETH and XRP also declined slightly, approaching their key supports.