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Apr 21 - 10:55 AM

CAD: BoC Slightly Hawkish At First Take But Positive Impact On Lonnie Will Likely Be Negated - CIBC

By eFXdata  —  Apr 21 - 10:24 AM

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

"The Bank of Canada had some new things to say about the economy and its policy stance, most of which could be anticipated from clues dropped in recent speeches. The policy rate was of course left unchanged. A material upgrade to growth (to about 6 ½% this year, 3¾% in 2022) driven by a much better start to the year, now has the output gap closing earlier, moving the timing of the first rate hike into latter half of 2022, despite an upgrade to potential growth. Note that markets were already pricing in a second half rate hike (and our own call is for a Q4 2022 move), but there was some chance that the BoC would have nudged potential up enough to stay with a 2023 rate hike story," CIBC notes. 

"On our first take, slightly hawkish given the second half 2022 rate hike guidance, although we expect that the Fed will also end up pulling forward its hike into 2022, negating the positive impacts on the loonie," CIBC adds. 

CIBC Research/Market Commentary


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