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MNI BOC Preview - Mar 2022: Lift-Off

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MNI: Canada

Executive Summary:

  • Likely a two-part affair with the statement-only release on Wed followed by Governor Macklem potentially fleshing out balance sheet runoff plans in the subsequent Economic Progress Report on Thu, before further commentary in front of the House of Commons.
  • Analysts unanimously expect the BOC to commence the hiking cycle with a 25bp hike, noting the rarity with which the Bank has hiked in larger clips in previous cycles.
  • The OIS market has since seen hike expectations slashed to 20bps for the meeting as part of today's broader repricing of rates globally.
  • Potential market implications are hard to gauge when approaching the meeting with such a fluid market environment but the size of the rally in rates on Tuesday could leave even broadly-as-expected guidance being treated as if it was hawkish.
  • One thing that does appear clear though is that Macklem will have plenty of opportunity to guide the market reaction as he sees fit with close to 3.5 hours of commentary through a busy Thursday for him.



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