MNI BOC Review - Jan 2022: Hiking In March And Beyond

EXECUTIVE SUMMARY

• A hawkish hold with the removal of previous forward guidance and signaling that rate increases are coming with balance sheet runoff potentially at the same time.
• Governor Macklem made sure it was seen as hawkish in the press conference: “this is a significant shift in monetary policy, and we judged that it is appropriate to move forward in a deliberate series of steps”.
• Failure to deliver a hike that was 70% priced has made little difference to analysts’ rate path projections, with most of those reviewed below calling for 4-5 hikes in 2022.
• Most see a front-loaded path but still with differences from June onwards as to whether the BoC times hikes with the Fed or forges ahead at its own MPR meetings.
• March is largely seen as a done deal with further hikes increasingly data dependent. There is only one LFS employment report and CPI release before the March 2 meeting.
• Sell-side balance sheet runoff expectations have been pulled forward with somewhat of a consensus for passive runoff to start in April, but we await timing details.

FOR FULL PUBLICATION PLEASE USE THE FOLLOWING LINK:

BOCReviewJan2022.pdf