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Essentials of Monetary Policy

Bank of Canada (BoC). “Shock and awe” of a supersized rate hike plus QT

April 13, 2022
Randall Bartlett
Senior Director of Canadian Economics

There weren’t a lot of surprises in today’s interest rate announcement and Monetary Policy Report (MPR). Markets had almost unanimously priced in a 50-basis point rate hike and the start of QT. Indeed, BoC communications were clear that Canadians should expect a “forceful“ response to exceptionally high inflation. Higher real GDP growth and inflation forecasts for 2022 were also anticipated, given the year-to-date data,commodity prices skyrocketing as a result of Russia’s attack on Ukraine, and supply chain disruptions that have yet tomeaningfully ease.