December 5, 2018 / 3:22 PM / 13 days ago

Instant View: Bank of Canada holds rates, more cautious on pace of hikes

TORONTO (Reuters) - The Bank of Canada kept interest rates on hold on Wednesday as expected and said there might be more room for non-inflationary growth, indicating the pace of future hikes could be more gradual. The central bank, which has lifted rates fives times since July 2017, said more monetary tightening would be needed to help meet its 2.0 percent inflation target.

MICHAEL GREGORY, SENIOR ECONOMIST, BMO CAPITAL MARKETS

“From where we were last time out, things are a little bit more dovish in tone, and, not surprisingly we’ve seen the Canadian dollar weaken in the wake of that.”

“Is January still in play for the next rate hike? Yes it is. We’ll get the ultimate judgment of that tomorrow (at Governor Stephen Poloz’s speech to the CFA Society in Toronto) when all the nuances can be displayed by the governor. But it does seem to me that there are a lot of factors than before weighing on the Bank of Canada’s decisions going forward.”

DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS AT SCOTIABANK

“I think longer run, they’re still committed to getting back toward a neutral policy rate, but they’re inserting some pause language along that path, that tamps down the expectations for a January hike.”

“I think there’s still a strong case to look through the (oil) price developments because they could be very transitory. But Alberta’s reaction or over-reaction in terms of implementing mandated cuts was something that they probably felt that they couldn’t look through, in terms of the near-term impact, and so that changed the dynamic a little bit.”

ANDREW KELVIN, SENIOR RATES STRATEGIST AT TD SECURITIES

“It looks pretty apparent that they are concerned about some of the developments we’ve seen in the energy sector of late. This reads more dovishly and I think it suggests that they may take a little bit longer than expected to get back to the neutral rate.”

“I still think they are going to get back to 2-1/2 percent, so the next move should be higher. But I think this clearly lengthens the time frame that should reduce the odds of a January hike substantially.”

Reporting by Fergal Smith, Allison Martell and Nichola Saminather; Editing by Denny Thomas

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below