Preview of the Bank of Canada monetary policy meeting Wednesday, 25 January 2023


This via Scotia at the meeting today, from a longer piece:

  • The Bank of Canada weighs in with a full set of communications this Wednesday, including an updated policy statement and monetary policy report with new forecasts (10 a.m. ET), followed by the press conference at 11 a.m. ET hosted by Governor Macklem and SDG Rogers. This will also be the first time the BoC has released meeting minutes two weeks later, on Feb. 8 and one day after Macklem speaks in Quebec City. The timing places the minutes between the release of the BoE on the same day and the release of the Fed three weeks after the meetings.
  • Markets are almost fully priced for a 25 basis point rate hike. All major domestic banks’ economics stores expect a 25 basis point increase, including Scotia Economics’ house view.
  • It is with modest conviction that we expect a 25bps increase.
  • I would assign a 55% chance to a 25 basis point up, a 35-40% chance to a break and we can’t completely close the door to a hawkish surprise as low probability but high impact tail risk. Part of the reason for that is that the BoC surprises both ways when it (often) chooses to surprise. Deputy Governor Kozicki said on Dec. 8: “We are still prepared to be strong,” which is code for a larger-than-normal rate hike “If a very large shock were to come.” What has happened since then probably doesn’t qualify, but it was after she spoke that more than 100,000 jobs were created in one month and US GDP growth forecasts were revised sharply higher, with implications for spillovers on the Canadian economy.

Those timings above are 1500 GMT and 1600 GMT respectively.

Previous previews:

Rogers and Macklem

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