The Bank of Canada 75 basis point hike to 3.25% also included a line in the satment that “interest rates will need to rise further.” That has economists at CIBC set to raise their forecasts for the terminal top and lower GDP.
"We’ll therefore be lifting our target for the end of this tightening cycle, with another 25-50 bps on tap for October," chief economist Avery Shenfeld wrote after the decision.
They still expect the BOC to pause after the OCtober meeting because the fast set of rate hikes "o behooves the central bank to pause at some point to see how the economy is coping."
CIBC noted that the BOC played up signs of growth and inflation in the statement while downplaying softer indicators. It also highlighed rising short-term inflation expectations while downplaying expectations further out, which have held steady.
They will be listening carefully to the speech from Rogers on Thursday "but this is one case where they might opt to hold off on anything material until the MPR in October, given some of the conflicting cross currents in recent data."
For the Canadian dollar, they note that it's unlikely that the BOC terminal rate exceeds the Fed but at this point, it has to be a growing possibility.