THE LENDER of Canada (BoC) is normally likely to hike its key rate by way of a further 75 bps. However, the loonie is unlikely to benefit from this type of staggering move, in the opinion of economists at Commerzbank.
BoC more likely to add another 75 bps
It’ll yet need to become clear if the BoCs plan of a soft landing will continue to work out and whether it’ll avoid the threat of a wage-price spiral. If inflation expectations consolidate at higher levels higher level hikes may possibly be asked to weaken price pressure which may make more pronounced effects on the economy much more likely.
An interest rate hike of the expected magnitude is unlikely to impress the loonie much today. Whether it’ll be in a position to benefit at the very least short-term depends upon how hawkish the statement appears to the marketplace and whether it includes signals for further rate steps.
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