Most Local Analysts Stick With BOC 25bp Hike Call For Next Week

Following today's CPI report, most analysts continue to expect a 25bp hike from the BoC next week, with some seeing it as the final hike of the cycle. National Bank meanwhile stand out, sticking with their view that the Bank should consider pausing.

• BMO: Underlying price pressures remain sticky for now and while the direction is at least mildly encouraging, there’s nothing to keep the Bank from hiking another 25bp next week.
• CIBC: Core inflation excluding mortgage costs is growing at a pace much closer to target. However, given the strong Dec job's report and tightness in the labour market, that likely won't be enough to deter the Bank hiking 25bps one last time next week.
• RBC: The breadth of inflation has narrowed: 60% of the basket is growing faster than the 3% top end, little changed from Nov but below a peak of >75% in July. One last 25bp hike still looks likely next week.
• Scotia: Traditional core CPI remains firms and the case for hiking by 25bps outweighs the case for pausing in my view, with the latter unwittingly driving an even further easing in financial conditions.

• National: The data don’t change our view that the Bank should consider a pause next week after last year’s extremely aggressive tightening brought real rates back to pre-pandemic levels. The return to normal service inflation levels may take a little longer but there are reasons to believe that the labour market will ease in a low-growth environment.