Thursday, 09 September, 2021
(BI) Bank of Canada Paves Way for Taper End, Quantitative
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2021-09-09 16:46:15.409 GMT
Perhaps the crux of Governor Tiff Macklem's remarks was that the reinvestment phase will last at least until the Bank of Canada raises the policy interest rate. Market participants also know that the weekly purchases will be adjusted to match maturities over a longer period, as some months have rather large maturities. This is operationally efficient and more predictable for the market.
Now that it's known the BoC will target C$4-$5 billion a month, we believe a cut to C$1.5 billion weekly is possible in October. The January meeting, with its fresh forecasts, seems an appropriate time for the bank to clearly communicate entry into the reinvestment phase. For rate hikes, September 2022 BAX futures are pricing in 35 bps, while Bloomberg Economics doesn't expect liftoff until early 2023.
-0- Sep/09/2021 16:46 GMT