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Oct 26 - 10:55 AM

CAD: BoC Less Aggressive Than The Consensus - CIBC

By eFXdata  —  Oct 26 - 10:30 AM

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

"The Bank of Canada continued hiking interest rates in an effort to bring inflation back under control, although the 50bp move, to take the overnight rate to 3.75%, was a little less aggressive than the consensus and market had expected (75bp was almost fully priced in). The statement and downgraded growth forecasts within the MPR hint at an economy that is losing momentum maybe a little quicker than previously anticipated. Housing is seen to have retreated "sharply" but there was also reference to consumer and business spending softening, as well as weaker international demand," CIBC notes. 

"Growth forecasts of just under 1% next year and 2% in 2024 represent downgrades from where they stood previously and a near brush with recession. However, even with the weaker growth profile, the Bank stated that its preferred measures of inflation are not yet showing meaningful evidence of easing, and as such the statement still suggested that interest rates "will need to rise further".  As such, this may just represent a slightly slower path to the same peak interest rate (4.25%) that we had forecast prior to today's smaller than anticipated 50bp hike," CIBC adds. 

CIBC Research/Market Commentary


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