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TDUX
Oct 26 - 09:55 AM
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Bank of America: Bank of Canada Preview: Hawkish Hold vs Largely Priced Hike

By eFXdata  —  Oct 26 - 09:26 AM

Bank of America Global Research previews the October BoC meeting on Wednesday.

"We expect BoC to hold at 2.25% on Oct 28, but it is a close call. Markets price in 85% chance of a hike, up from 35% a week prior, following hawkish communication and rising inflation expectations. Weak labor data and core inflation below target favor a hold; headline inflation above 3%, hawkish BoC communication, and rising inflation expectations leave meaningful hike risk," BofA notes

"Either outcome likely comes with hawkish communication and a move higher in Dec hike pricing. A surprise hold could trigger a sharp but short-lived rates rally, with the press conference likely to be hawkish. A hike likely delivers modest bear flattening. We would see a hike as the start of a small adjustment-2 total hikes-not a full hiking cycle," BofA adds.

 

Source:
BofA Global Research

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