Bank of Canada held its interest rate unchanged at 4.5 per cent at its March 8 policy decision. Read what the economists say
James Orland, TD Economics
“Today was always set to be a placeholder meeting. The BoC had clearly communicated it would hit pause its hiking cycle and let the economy absorb the impact of 425 basis points of monetary policy tightening over the last year. The only thing to analyze was how firm the BoC would be on reinforcing the possibility of further hikes should incoming data prove stronger than expected.
“The issue is that this hasn’t played out in the broader economy. There has been a significant upswing in the jobs market, with employers hiring at a breakneck pace. This is happening alongside a massive surge in government payouts to households, filling the wallets of Canadians and sending them on a spending spree. This is juicing the economy at a time when the BoC needs to see the opposite.
the bank gave no hints that it is feeling under pressure to change its messaging in the face of a more hawkish sounding Fed and some weakening in the dollar“This was easily its least anticipated decision in more than a year with the BoC having clearly signalled a pause in January and set a fairly high bar to resume tightening. Six weeks was simply too little time to see “an accumulation of evidence” in favour of a restart, and in any case data over that period was mixed.
the BoC reiterating a conditional pause, and maintaining a tightening bias but not sounding inclined to act on it
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