The statement and downgraded growth forecasts within the MPR hint at an economy that is losing momentum maybe a little quicker than previously anticipated.” “The Bank of Canada continued hiking interest rates in an effort to bring inflation back under control, although the 50-basis-point move, to take the overnight rate to 3.75 per cent, was a little less aggressive than the consensus and market had expected (75 basis points was almost fully priced in).

While the statement leaves open the door to the possibility of another 50-basis-point move in December, expected economic underperformance will likely limit the next hike to only 25 basis points.”Īndrew Grantham, senior economist, CIBC Capital Markets counterpart as a result of the interest-rate sensitivity of the Canadian economy. “As we’ve long said, the Canadian central bank needed to pivot before its U.S. That said, the risk of such an aggressive move apparently outweighed the reward.” “In the Bank of Canada’s game of chicken with inflation, central bankers were the first to swerve… The fact that core inflation hasn’t slowed, inflation expectations remain elevated and demand is still outrunning supply, the Bank could have easily justified a larger rate hike. Royce Mendes, managing director and head of macro strategy at Desjardins Here is what economists say about the surprise move: In the accompanying monetary policy report, the central bank is now expecting inflation to cool to three per cent in late 2023 before returning to the two per cent target by 2024. The Bank acknowledged that while inflation is off its peak, it still remains too high. Its trend-setting policy rate now stands at 3.75 per cent. 26 rate decision, a smaller move than the 75-point hike many economists were anticipating. The Bank of Canada surprised markets with a 50-basis point hike in its Oct.

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