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Citi - Slightly Hawkish Statement, Watch Macklem Tomorrow

CANADA
  • Following the BOC hiking 25bps to 0.5%, Citi see the statement as a “slightly hawkish outcome - especially on growth and inflation - relative to expectations going into the meeting”.
  • The Bank did however maintain some optionality on the balance sheet, considering when to end the reinvestment phase and begin roll-off. “Our economists' base case was for an April announcement but it is possible we get some details tomorrow”.
  • Citi still think Macklem’s presentation tomorrow of the Economic Progress Report as well as a proceeding press conference could be significant.
  • However, the hawkish risk that he provides insight on QT and leans towards the crisis having an inflationary impulse over the negative growth effect, appears to have “fallen a bit” after the “relatively balanced” policy statement.

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