BoC: Rate hike expectations has faded - BBH

The Bank of Canada meets today and expectations that it would hike rates for a third consecutive meeting has faded with the combination of softer data and official comments, explains the research team at BBH.  

Key Quotes

“We are not persuaded that what Finance Minister Morneau called a "doubling down" of on its fiscal support challenges Bank of Canada policy, though Bank of Canada Governor Poloz has recognized the Child Benefit Program as helping boost consumption (close output gap?).”  

“The US dollar is advancing against the Canadian dollar for the fifth consecutive session, and it is now at two-month highs near CAD1.2700.  The low for the year was set in early September near CAD1.2060.  The two-year rate differential is at 12 bp, a level which has not been seen for three months.  The CAD1.2725 area corresponds to a retracement objective (38.2%) of the greenback's decline since year's high in May (just below CAD1.38).  A move through there targets CAD1.29.”