The Scotiabank Research Team offers a sneak peek at what to expect from Wednesday’s Bank of Canada (BoC) interest rate decision, which could stir the CAD markets.
“The Bank of Canada weighs in with a full suite of communications this Wednesday including an updated policy statement and Monetary Policy Report with fresh forecasts (10am ET) followed by the 11am ET press conference hosted by Governor Macklem and SDG Rogers. This will also be the first time that the BoC releases meeting minutes two weeks later on February 8th and a day after Macklem speaks in Quebec City. The timing puts the minutes between the BoE’s release on the same day and the Fed’s release three weeks after meetings.”
“Markets are almost fully priced for a 25bps rate hike. All of the big domestic banks’ economics shops expect a 25bps hike including the Scotia Economics house view.”
“It is with modest conviction that we expect a 25bps hike.
“I would assign 55% odds to a 25bps hike, 35–40% odds to a pause and we can’t fully shut the door to a hawkish surprise as a low probability but high impact tail risk.”
“Part of the reason for that is that the BoC surprises in both directions when it (often) chooses to surprise.”
Deputy Governor Kozicki said on December 8th that “We are still prepared to be forceful” which is code language for a larger-than-normal rate hike “If there were to be a very large shock.” What has happened since probably doesn’t qualify, but it was after she spoke that over 100k jobs were created in a single month and forecasts for US GDP growth began to be revised sharply higher with implications for spillover effects into Canada’s economy.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.