Earlier posts on the Bank of Canada monetary policy decision today (read from the bottom up for chronological order):

The key points on the BoC via RBC:

  • Bank of Canada hiked overnight rate by 25 bps to 4.5%, but signaled further increases are not expected
  • Positive signs inflation is easing and a slowing economy have increased confidence that interest rates are already high enough
  • BoC still 'data-dependent' but we expect will now leave the overnight rate unchanged for the rest of this year

On the conditionality of the pause:

With inflation still running very hot, Governor Macklem confirmed that the central bank is more concerned about upside than downside risks to inflation. The pause in interest rate increases is conditional on the outlook evolving as expected and inflation pressures continuing to ease.

(bolding is RBCs).


CAD weakened. The policy divergence with a still-hiking Fed should be a tailwind for USD/CAD further:

usdcad 26 January 2023 boc