CIBC Research discusses its reaction to today's BoC April policy decision.
"The Bank of Canada brought out the big guns in its fight against inflation, but for those fearing the worst, it’s noteworthy that it still sees room for the economy to put in two reasonably healthy years for growth as it does that. As expected, the overnight rate was lifted by 50 basis points, and the Bank will let maturing bonds roll of its balance sheet to unwind what it bought under quantitative easing. The statement cited upside surprises to growth and the inflation impacts from the Ukraine war," CIBC notes.
"The Bank’s estimate of the neutral rate is a good guide to the finishing line for this rate hike cycle, and the MPR’s estimate is centred on 2.5%. We had expected that to be in the 2.25% to 2.5% range, but by picking the higher of those two options, it adds a touch of upside risk to our existing forecast for a peak overnight rate of 2.25%, but is still well below what the market has been pricing in," CIBC adds.