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Brief Sell-Side Analyst Overview: Wed BoC Policy Annc

CANADA

Bank of America: BoA economists warn the surging labor market (Canadian economy added a net 153.7k jobs in November vs. estimates of only 35k) "means the risk is BoC moves the 'live' meetings forward to 1H from the middle quarters of 2022."

  • Hawkish tone may not translate to further front-end selloff or $CAD downside due to aggressive BoC pricing and global risks.
Bank of Montreal: Steady at 0.25, while conceding a chance the Bank provides a rate hike signal over the next couple meetings. Risks remain though, with Omicron uncertainty at the top of the list.
  • Since winter will likely push case counts higher as well, especially during the holidays, the BoC might just wait until January to provide a signal. We wouldn't rule out a March start to rate hikes, as long as the message is crystal clear in January.
Barclays: BoC "hawkishness is well priced in as OIS implied market pricing sees a rate hike starting in March 2022."
  • Barclays expects a steady rate and unchanged forward guidance "wherein they expect the economic slack to be absorbed sometime in the 'middle quarters of 2022'" while they "expect the bank to hike three times in 2022 at a pace of 25bp every quarter, utilizing the meetings with MPR updates (April, July, October)."
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