BOC Macklem April 13 2022
  • Normally when we raise rates, the loonie appreciates and so that does part of the work for us. This time that's not happening
  • USD has appreciated considerably over the past year

I see some characterizations of Macklem's comments as hawkish today and that's mostly fair. There's a window for a pivot here but I think worries about a further fall in CAD are part of the reason why. Moreover, I don't think the BOC feels the same need to signal a dovish shift ahead of time as others.

In any case, USD strength is really cranking up today with USD/JPY up 120 pips to 1.3736.

More:

  • When we assess impact of higher intrest rates on demand, will factor in high household indebtedness levels
  • We are more concerned about he upside shocks to inflation than the downside
  • Path to a soft landing in Canada is narrow and there are risks
  • Whether we can get a soft landing will depend on how sticky inflation is