Bank Of Canada Bets On Disinflationary Path

Summary

• The Bank of Canada kept rates unchanged at 4.5% today.
• While BoC acknowledged that the labour market “remains very tight”, it doesn't have the same fears as the Federal Reserve that this will keep inflation pressures elevated.
• The option for a new hike is open, but we doubt that will be necessary, and the next move should be a cut.

Marc Dufresne

By James Knightley, Chief International Economist; and Francesco Pesole, FX Strategist

As widely expected, the Bank of Canada kept rates unchanged at 4.5% today. The Bank observed that restrictive monetary policy is already showing its effect on the Canadian economy, and