Bank of Canada rate decision 2.25% vs 2.25% expected
- Prior was 2.25%
- Rates have been held steady since a cut in October
- The war is weighing on global economic growth and pushing up inflation
- the US administration continues to propose new tariffs
- US economic growth remains solid supported by consumption and AI‑related investment
- In the euro area, growth is subdued
- Global equity markets have been buoyant
- Looking through monthly volatility, employment in Canada is little changed since the start of the year
- Recent data suggests that growth will resume in the second quarter but, even with some rebound, the economy is expected to remain in excess supply
- Q1 GDP edged down and was weaker than forecast
- So far, there has been limited evidence of broad-based pass-through of higher energy prices to other consumer prices
The BOC slightly altered this key line. It previously said:
As expected, so far there is little evidence that oil prices have fed through more broadly to goods and services prices, but this warrants close attention in the months ahead.
And now says:
Governing Council is continuing to look through the war’s near-term impact on headline inflation, but will not let higher energy prices become persistent inflation
I'd say that's incrementally hawkish.
Before the decision, the market was pricing in 2.4 bps of hiking at the July 15 meeting, or a 10% chance of a hike. Skipping ahead to December, there are 36 bps of hiking priced in, or a hike and a 44% chance of a second hike.
USD/CAD was trading at 1.3907 ahead of the decision as it looks to carve out a double top. The US dollar is broadly weaker today as the market breathes a sigh of relief that CPI wasn't a five-alarm fire.
This article was written by Adam Button at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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