Bank of Canada likely to hike key interest rate by 25 bps in December

The Bank of Canada is likely to raise its key interest rate by 25 basis points in December and twice more next year around April and October, noted Scotiabank in a research report. The risk is tilted towards later than December rather than sooner. By 2019, a neutral policy rate range of 2 percent to 2.5 percent is projected for this cycle.

BoC governor’s Poloz’s recent speech and press conference continue to leave the door open to additional rate hikes, while also indicating some patience and data dependence. A pause was hinted by stating that the central bank would “feel our way cautiously”, indicating nothing “mechanical in our approach to monetary policy” which leans against a straight line of uninterrupted policy moves in anticipation of model-based developments, stated Scotiabank.

At 18:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was slightly bearish at -64.9753, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 121.526. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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