• Notes from the Desk | Bank of Canada - The Unchanged & The Changed

Notes from the Desk | Bank of Canada – The Unchanged & The Changed Oct 25 2023

Notes From The Desk: Bank of Canada – The Unchanged & The Changed


The Bank of Canada (BoC) held rates steady this morning while continuing the process of quantitative tightening.

While this was expected, there were some noteworthy changes to their economic forecast.

Looking ahead.


  • The Forecasts for 2023 & 2024 GDP were both revised from 1.8% and 1.2% down to 1.2% and 0.9%.
  • Inflation is projected to average 3.5% until the middle of next year before falling to 2.1% in 2025.

Essentially, the BoC foresees inflation to be stickier and growth to be slower than was previously anticipated.


Central bank speak.

During the press conference, Governor Macklem said there were clear signs that higher interest rates were slowing demand and expected this trend to continue as more Canadians refinanced their mortgages.

Despite this expected slowdown in spending, the Governor was more circumspect when discussing inflation.  He pointed to the fact that inflation expectations remain elevated and the businesses were still quick to pass on price increases.

As such, he kept the door open to further hikes if warranted with it being far too early to talk about cuts.


Market implications.

It seems the BoC will be on hold for several quarters, which should offer some stability to shorter maturity rates.

Longer-dated yields are still at the mercy of the market and will be less affected by the Bank’s policy and stance.

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