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The Bank of Canada (BoC) raised its policy rate 25 bps to 5.00% at last week's announcement, and while BoC Governor Macklem suggested the end of the tightening cycle was close, there were nonetheless several hawlish elements in the announcement. In particular, the Bank of Canada expects excess demand within the Canadian economy to persist for longer than previously anticipated, while also raising its CPI inflation forecasts.

The Bank of Canada (BoC) raised its policy rate 25 bps to 5.00% at last week's announcement, and while BoC Governor Macklem suggested the end of the t

We have, for some time, been anticipating a slowdown in Canada's economy in 2023, given an accumulation of headwinds through late last year. While we still believe that slowdown will be forthcoming, the economy has proved surprisingly resilient at the beginning of 2023. To be clear, we don't think the Canada's economy has been suprising or strong enough to prompt further Bank of Canada (BoC) rate hikes. However, depending on how quickly (or not) any growth slowdown transpires, it is possible that BoC easing begins later than our current forecast for initial rate cuts starting in...