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The effect of the BoC on the CAD could be rather short-lived, barring a very moderate result – ING

The Bank of Canada will raise rates for the last time on Wednesday, raising 25 basis points to take the overnight rate to 4.5%. In the opinion of ING economists, CAD’s initial reaction could be quite subdued.

BoC is no longer a key factor

“The 25 basis point hike for the March meeting is fully priced in, which means that the Bank of Canada is expected to raise interest rates next time, should it decide to do so this week. This means that the market reaction should not be much different if the BoC: a) raises 25 basis points and signals that rates may have peaked; b) maintains the rates but indicates that there could be another rise“.

“As a last resort, Unless the outcome is very dovish (no hike and saying rates have peaked) or very hawkish (raise and signal for more hikes), the impact on the CAD could be rather short-lived..”

Source: Fx Street

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