After decisions when the Bank of Canada doesn't hold a press conference, it trots out one of the top deputies a day later to clarify any market misconceptions about the statement, and to tweak the message if needed.
- Given inflation is still well-above target, BOC still more worried about upside risk
- Will need to see more evidence to fully asses whether mon pol is restrictive enough to return inflation to 2%
- Near-term US and European outlooks for growth and inflation are higher than we expected, which could point to more inflationary pressure in Canada
- If economy develops as forecast, we shouldn't need to raise rates further
- Looking through data since January, we found a mixed picture overall but broadly inline with our outlook
- Global and domestic factors combined to drive inflation up and both will need to retreat further to get us back down to 2%
I take these comments as a tad hawkish compared to the statement but the main message is that the baseline is not for the BOC to hike. Given that that market is pricing in a 26% chance of a hike at the April meeting, I'd say there are risks of disappointment. On the margins, that's CAD bearish but right now the global risk trade is the dominant driver.