A PIMCO piece on the Bank of Canada. The Bank has hastened its hiking cycle due to:
- above-target inflation,
- higher commodity prices,
- and concerns about financial stability
And adds that at the mid-April meeting:
- Bank of Canada signalled more hikes to come, and announced plans to reduce its balance sheet
PIMCO says that:
- Buoyed by strong commodity prices, above-trend growth and inflation, a closed output gap, and an expected lag before higher rates affect consumers, BOC officials likely believe the economy can weather a faster hiking cycle.
- The Canadian economy should also benefit from further reopening tailwinds this year.
- The inflation surge in March suggests a hike of 50 bps may come at the BOC’s next meeting on 1 June. However, relative to some other DM central banks, such as the Federal Reserve, the BOC likely faces higher interest rate sensitivity and more modest underlying inflationary pressures – meaning the BOC may ultimately deliver less tightening.
Info via this piece here, more detail at that link if oyu wish.
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