{"id":58974,"date":"2022-01-26T19:32:57","date_gmt":"2022-01-26T15:32:57","guid":{"rendered":"https:\/\/noortrends.ae\/en\/?p=58974"},"modified":"2022-01-26T19:37:44","modified_gmt":"2022-01-26T15:37:44","slug":"boc-leaves-policy-rate-unchanged-at-0-25-as-expected-signals-hike-likely-in-march","status":"publish","type":"post","link":"https:\/\/noortrends.ae\/en\/boc-leaves-policy-rate-unchanged-at-0-25-as-expected-signals-hike-likely-in-march\/01\/26\/market-updates\/","title":{"rendered":"BoC Leaves Policy Rate Unchanged, Signals Hike In March"},"content":{"rendered":"\n<p>The Bank of Canada announced on Wednesday that it was holding its overnight interest rate at 0.25%, as the majority of market participants had been expecting. Note that a minority had expected a 25bps rate hike to 0.50%. The central bank also signaled that a rate hike would likely be coming in March by saying that overall slack in the economy had been absorbed, satisfying the conditions outlined in the bank&#8217;s forward guidance for an interest rate hike.  <br><br><strong>Additional Takeaways On Rate Hikes&#8230; <br><\/strong>Overall slack in the economy has been absorbed, satisfying the condition outlined in the bank\u2019s forward guidance on its policy interest rate. <br><br>The BoC has decided to end its extraordinary commitment to hold its policy rate at the effective lower bound. <br><br>The BoC will use its monetary policy tools to ensure that higher near-term inflation expectations do not become embedded in ongoing inflation. <br><br>The BoC expects interest rates will need to increase, with the timing and pace of those increases guided by the bank\u2019s commitment to achieving the 2% inflation target. <br><br><strong>On possible balance sheet reduction&#8230;<br><\/strong>BoC will keep its holdings of Canadian government bonds on its balance sheet roughly constant at least until it begins to raise the policy interest rate. <br><br>It is continuing its reinvestment phase, keeping its overall holdings of Canadian government bonds roughly constant.<br><br>At that time, the BoC will consider exiting the reinvestment phase and reducing the size of its balance sheet. <br><br><strong>Economic\/financial commentary&#8230;<br><\/strong><br>Financial conditions remain broadly accommodative but have tightened with growing expectations that monetary policy will normalize sooner than was anticipated<br><br>The Omicron variant is weighing on activity in the first quarter.<br><br>The USD\/CAD pair saw a positive reaction to reflect the Canadian dollar\u2019s weakness after the BoC disappointed a minority of market participants by not opting to surprise with a 25bps rate hike on Wednesday, but rather signal a rate hike coming up at the next meeting. USD\/CAD currently trades about 60 pips above its pre-BoC announcement levels. Given it was a hawkish hold, with the bank signaling rate hikes and quantitative tightening will be coming soon, the CAD&#8217;s overall losses may be somewhat limited.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Bank of Canada announced on Wednesday that it was holding its overnight interest rate at 0.25%, as the majority of market participants had been expecting. Note that a minority had expected a 25bps rate hike to 0.50%. The central bank also signaled that a rate hike would likely be coming in March by saying &hellip;<\/p>\n","protected":false},"author":13,"featured_media":33760,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4707,37,36],"tags":[6932,8633,6987,7445,8166,7015],"class_list":["post-58974","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-breaking-news","category-forex-markets","category-market-updates","tag-boc","tag-government-bonds","tag-inflation","tag-interest-rate","tag-omicron","tag-usd-cad"],"_links":{"self":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/58974","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/comments?post=58974"}],"version-history":[{"count":3,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/58974\/revisions"}],"predecessor-version":[{"id":59027,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/58974\/revisions\/59027"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media\/33760"}],"wp:attachment":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media?parent=58974"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/categories?post=58974"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/tags?post=58974"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}