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Dec 08 - 12:55 PM

CAD: Markets Went Into The BoC Announcement Priced For A Faster Run-Up In Policy Rates In 2022 - CIBC

By eFXdata  —  Dec 08 - 10:55 AM

CIBC Research discusses its reaction to today's BoC policy statement. 

"The Bank of Canada is getting ready to rumble, signalling that its fight against sustained inflation will commence with interest rate hikes in the middle two quarters of the year, but with language that hints that an April move is in the cards. While holding the policy rate at 0.25% today and maintaining bond reinvestment, the Bank’s statement offset a disappointing downward revision to Q2 GDP with an optimistic take on momentum in Q4...We’re looking for 150 bps in total hikes over 2022-23, divided equally between those two years," CIBC notes. 

"Markets went into this announcement already priced for an even faster run-up in policy rates in 2022 with fewer pauses than we expect, and what’s underpriced is the likelihood that the Fed will be on a similar timetable as the BoC, given the firmer path we’ve seen for GDP and wage/price inflation stateside," CIBC adds. 

Source:
CIBC Research/Market Commentary

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