BOC Maclem: Moving to QT would be a natural next step

Bank of Canada's Macklem speaks after the hike yesterday of 25 basis points

When QT starts, we will stop purchasing Canada government bonds, from that point forward, maturing bonds will not be replaced when they rolled off the balance sheet
decision to hike rates means ending reinvestment and moving to QT would be a natural next step: timing and pace of QT will be fully transparent
when we initiate quantitative tightening, we do not intend to actively sell bonds.
Broadening in price pressures is a big concern, it makes it more difficult for Canadians to avoid inflation
Longer-term inflation expectations have remained well anchored, and we will use our tools with determination to keep them that way.
History shows that if inflation expectations become unmoored, it becomes much more costly to get inflation back to target.
We need higher rates to dampen spending growth so demand is not run significantly ahead of supply
Canadian economy can handle higher rates, we know this will be significant adjustment.
We expect global demand and supply of goods to gradually come into better balance through 2022.
Roughly 40% of our bond holdings mature within next two years, this suggests balance sheet would shrink relatively quickly. As Canadian government bond holdings mature and roll off, level of settlements balances on our balance sheet
Will decline roughly in tandem. Our primary tool is a policy interest rate adjustments to pace and timing of removal of monetary stimulus
Will focus on policy rate we fully intend to tighten policy and a deliberate and careful way, being mindful of the impacts and monitoring affects closely

Yesterday the Bank of Canada raise rates by 25 basis points to 0.5%. Expectations are that rates will continue to rise at future meetings

The USDCAD is higher on the day after breaking below its 100 day moving average yesterday and moving outside of the trading range that has confined the pair going back to January 26. The price has moved back with in that trading range and has moved up to test its falling 100 hour moving average 1.2696 today. The high price has so far reached 1.26921, but has backed off and currently trades at 1.2667.