MNI BRIEF: BOC Approaching End Of Tightening Cycle

Bank of Canada Governor Tiff Macklem told reporters Wednesday he's approaching the end of rate hikes for this cycle as inflation and growth moderate, a slowdown that led him to opt for a smaller-than-expected 50bp rate increase.

That opens up the prospect of returning to more standard 25bp changes following moves of 100bps and 75bps earlier this year. “Coming into this meeting, interest rates were already considerably higher," he said. "Combine that with the fact that there are now clear signs that the economy is slowing, we judged that it was appropriate to slow the pace of increase in our policy rates from very big steps to a big step.”

“We also indicated that we expect interest rates will need to rise further, so that suggests that there could be another larger-than-normal step or we may be able to move to more normal smaller steps,” he said. “We are getting closer to the end of this tightening phase, but we’re not there yet.” CAD was little changed at CAD1.3548, recovering earlier losses. The BOC will hike into a recession, an adviser told MNI.