BoC: Next hike to come in March – TDS

Analysts at TDS are pushing our call for the next Bank of Canada rate hike to March, with a second hike in July.

Key Quotes

“We don’t see the Bank hiking more than twice in 2018 as the household-debt overhang leaves the Canadian economy on fragile footings.”

“Poloz aims for the sweet spot and plans to let the economy run hot. Hiking only once in Q1 supports that approach in our view.”

“Rates: Our rates outlook remains intact with our new March call. We think short-end pricing is a reasonable reflection of risks surrounding the Bank. We favour owning Canada versus the US in the front-end and steepening trades.”

“FX: Our USDCAD forecast remains unaltered with the pair anchored around 1.25 over the medium-term, barring a NAFTA dissolution.”