What to expect from BoC today

After the blowout GDP figures, we now see little reason for the BoC to wait before hiking interest rates again.
The statement could underscore that by pointing to still-tame core inflation and a firm Canadian dollar as a drag on growth. That might actually put an earlier stop to the Canadian dollar's run than having a hawkish message in September, but leaving the actual rate hike, and the message about what comes next, until October.

Alternatively, the Bank of Canada could get off the highway, and take the slower road by now, leaving rates unchanged in September. The September pause would help signal to markets that hikes will be gradual, but the statement's bullish picture on growth would have markets heavily betting on an October hike.

From RBC seeing the BoC on hold at their policy meeting on Wednesday. They think the BoC will want to see how the housing market and NAFTA talks evolve as well as two each of trade/jobs/CPI reports and their Business Outlook Survey before hiking at the October 25th meeting.

Source Bloomberg Pro Terminal

Trader I. Ivanov

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