BREAKING: CAD drops after in-line BoC decision

The Bank of Canada announced its latest monetary policy decision at 3:00 pm BST today. No surprise from BoC was offered and the main rate was left unchanged at 5.00% for the second meeting in a row. Such an outcome was expected by economists and was also priced in by money markets, which suggested less than 5% chance of a hike just before the meeting. However, statement showed that BoC is ready to increase rates further if needed. However, BoC noted that there is growing evidence that previous rate hikes have damped economic activity.

Forecasts are for CPI to average 3.5% through mid-2024 and drop to 2% in 2025. Annualized Q3 2023 GDP is seen at 0.8%, down from 1.5% forecast back in July, while Q4 growth is seen at 0.8% as well.

CAD weakened slightly following the release with USDCAD moving higher. The pair climbed above the early-October highs and reached the highest level since late-March 2023.

Source: xStation5