Free Trial

MNI BOC Review - December 2021: Holding To Mid-'22 Liftoff

MNI BOC Review - December 2021: Holding to Mid-'22 Liftoff

MNI BOC Review - December 2021: Holding To Mid-'22 Liftoff

EXECUTIVE SUMMARY

  • Main policy rate held at 0.25 yet again
  • Lift-off forward guidance still mid-2022
  • Maintains Quantitative Easing in reinvestment phase
  • Inflation expected to slow toward 2% in 2H'22
  • Potential for Omicron variant to weigh on economic growth
For full review:

MNI BoC Review, December 2021.pdf

The Bank of Canada opted to finish out 2021 quietly by holding the policy rate steady at 0.25% yet again, forward guidance for liftoff maintained for the middle quarters of 2022.

“We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank’s October projection, this still happens sometime in the middle quarters of 2022.”

While markets had priced in liftoff in March 2022, several sell-side analysts had expected the Bank to come out with a more hawkish signal towards hiking as early as January amid growing inflation and surging labor market (Canadian economy added a net 153.7k jobs in November vs. estimates of only 35k).

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.