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MNI BoC Preview, Jul'22: Eyeing A "More Forceful" 75bp Hike

EXECUTIVE SUMMARY

  • The Bank of Canada is widely expected to hike its overnight rate 75bps to 2.25% on Wednesday in precedent set by the Fed last month as it again ramps up the pace of rate hikes.
  • The statement and following Monetary Policy Report press conference are expected to continue the hawkish language from June when it first opened the option of acting “more forcefully”.
  • However, with a 75bp hike more than fully priced and with some analysts not ruling out a 100bp hike, the Bank will have to be particularly hawkish to satisfy markets, focusing more on rampant increases in inflation, high measures of surveyed inflation expectations and household balance sheet resilience to hikes and less so on slowing economic growth and the rolling over in housing market activity in particular.

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BOCPreviewJul2022.pdf

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