USD/CAD: BoC's 75 bps hike unlikely to impress the loonie – Commerzbank

The Bank of Canada (BoC) is generally expected to hike its key rate by a further 75 bps. However, the loonie is unlikely to profit from such a staggering move, in the opinion of economists at Commerzbank. 

BoC likely to add another 75 bps 

“It will yet have to become clear whether the BoC’s plan of a soft landing will work out and whether it will avoid the risk of a wage-price spiral. If inflation expectations consolidate at higher levels higher rate hikes would probably be required to weaken price pressure – which would make more pronounced effects on the economy more likely.”

“A rate hike of the expected magnitude is unlikely to impress the loonie much today. Whether it will be able to benefit at least short-term depends on how hawkish the statement seems to the market and whether it contains signals for further rate steps.”

See – BoC Preview: Forecasts from eight major banks, hiking rates again