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Very Modest Market Reaction To The BoC Statement

  • USDCAD stays within 10 pips of prior levels, GoCs outperforming a sell-off in Tsys (2Y GoC yield +0.5bp since BoC for just +1bp on the day).
  • A very similar concluding paragraph from the BoC. Minor dovish tilt in that it omits concern about progress towards price stability being slow, otherwise it’s essentially a repeat.
  • “Overall, these data and indicators for the fourth quarter suggest the economy is no longer in excess demand.” – similar to what Macklem has said recently, although doesn’t opt for a more dovish angle of excess supply.
  • “In recent months, the Bank’s preferred measures of core inflation have been around 3½-4%, with the October data coming in towards the lower end of this range.” – no acknowledgment of the latest step lower to 3% in the three-month average annualized rate of core.
  • Over to Dep Gov Gravelle and the Economic Progress Report tomorrow.

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