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BoC deputy governor Sharon Kozicki took pains to confirm the interpretation of yesterday’s rate hike announcement:

The Bank of Canada could pause interest rate hikes as early as next month as it shifts to a more “data-dependent” approach to monetary policy, although the bank is still prepared to be “forceful” if necessary, deputy governor Sharon Kozicki said on Thursday.

“We are moving from how much to raise interest rates to whether to raise interest rates,” Ms. Kozicki said in a speech to the Urban Development Institute of Quebec in Montreal.

She was speaking the day after the central bank delivered another 50-basis-point rate hike, lifting the benchmark lending rate to 4.25 per cent, the highest level since early 2008.

After seven consecutive rate hikes, which have dramatically increased the cost of borrowing for Canadians over the past nine months, the bank is preparing to step back to assess the impact of its aggressive tightening on inflation and the broader economy.

“If we are surprised on the upside, we are still prepared to be forceful. But we recognize that we have raised interest rates rapidly and that their effects are working their way through the economy,” Ms. Kozicki said, according to the prepared text of her speech.

The next rate decision on Jan. 25 will be based on incoming data, she said. Markets expect the bank to stand pat at 4.25 per cent next month.
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“The largest shifts in spending have been in the most interest-sensitive areas, suggesting our monetary policy actions are working to rebalance supply and demand,” Ms. Kozicki said.

This entry was posted on Thursday, December 8th, 2022 at 9:52 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.