BoC Hikes And Leaves The Door Open For More To Come

Derek Holt, VP & Head of Capital Markets Economics

September 7, 2017

Derek Holt believes the BoC did the right thing in raising its overnight rate to 1%. The broad tone of the accompanying statement is generally balanced but it leaves the door wide open to further interest rate hikes. The key here is that if the BoC had wanted to simply reverse the 2 quarter-point cuts of 2015 then they would have been clearer while indicating as much as opposed to indicating that future moves will be informed by data and other developments. A hike with a moderately hawkish bias met our expectations. One should not rule out another hike over the duration of 2017. The C$ appreciated by about two full pennies versus the USD post-statement and the two year GoC yield increased by about 10bps.