The Bank of Canada (BoC) hiked 75bps this morning, bringing the overnight rate to 3.25%
The BoC squashed any hope that they were finished by making it clear that ‘policy interest rates will need to rise further.’
Implications:
- Little reaction in yields as the bond market is already priced for a terminal rate of 3.5% to 3.75%
- Going forward, the pace of hikes is likely to be in clips of 25 bs -50 bps
- Inflation remains the most important data point
