Bank of Canada hikes rates 50 bps vs 50 bps expected

Ahead of the decision, the OIS market was pricing in a 62% chance of a 25 bps hike while economists narrowly favored a 50 bps hike.

• Prior rate was 3.75%
• Prior statement said "the Governing Council expects that the policy interest rate will need to rise further" but this has been dropped
• "Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target"
• There is growing evidence that tighter monetary policy is restraining domestic demand
• Overall, the data since the October MPR support the Bank’s outlook that growth will essentially stall through the end of this year and the first half of next year.
• We are resolute in our commitment to achieving the 2% inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term target and restoring price stability for Canadians.
• Inflation is still too high and short-term inflation expectations remain elevated
• In Canada, GDP growth in the third quarter was stronger than expected, and the economy continued to operate in excess demand. Canada’s labour market remains tight, with unemployment near historic lows
• There's no press conference today but the BOC's Kozicki speaks tomorrow at 12:45 pm ET
• Full statement

This is exactly the scenario I laid out in my BOC preview. It's 50 bps but the statement indicates the BOC will now 'consider' rates, which is another word for pausing.

"In terms of a trade, there may be an opportunity to fade a CAD CAD The Canadian dollar (CAD) is the official currency of Canada and at the time of writing is the fifth most-held reserve currency in the world behind only the US dollar, euro, Japanese yen, and British pound.The CAD is commonly referred to as the Loonie by forex analysts and traders. At the time of writing, the CAD accounts for 2% of all global currency reserves.Its appeal is strong among central banking authorities given Canada’s economic strength, sovereignty, and historic stability.Originally i The Canadian dollar (CAD) is the official currency of Canada and at the time of writing is the fifth most-held reserve currency in the world behind only the US dollar, euro, Japanese yen, and British pound.The CAD is commonly referred to as the Loonie by forex analysts and traders. At the time of writing, the CAD accounts for 2% of all global currency reserves.Its appeal is strong among central banking authorities given Canada’s economic strength, sovereignty, and historic stability.Originally i Read this Term jump on a dovish 50 bps hike," I wrote. CAD rallied on the decision but has given 30 pips back already.

The speech from Kozicki tomorrow is now a bigger event because she will be pressed on whether the BOC is going to pause. I don't expect her to be unequivocal but she will highlight all the tightening in the pipeline and the need to wait and see.