Bank Of Canada Hikes Rates To 1.25%; Gold Priced In CAD Jumps

Bank Of Canada Hikes Rates To 1.25%; Gold Priced In CAD Jumps

The Bank did say that higher rates would be needed over time, but there was absolutely no sense of urgency at all on this score ...

The bank acknowledged that labor market slack is being absorbed more rapidly than previously expected.

As of Thursday, Jan. 18, all five now have the same prime lending rate of 3.45 per cent. It also warned recent US tax cuts - bringing the corporate rate down to 21% from 35% - could "reinforce these uncertainty effects", with companies opting to shift planned capital expenditures from Canada to the U.S.

The central bank was widely expected to raise its rate after data in recent months showed, the and the.

In the MPR, the bank nudged up its expectations for how the economy will perform this year and next.

The central bank raised its forecast for 2018 growth to 2.2 percent from 2.1 percent, while it also bumped up its forecast for 2019, after an estimated 3.0 percent expansion in 2017. The two-year was down 2 cents to yield 1.784 per cent and the 10-year declined 22 cents to yield 2.199 per cent.

But while broadly positive about the economy's prospects, the bank cited "uncertainty about the future of NAFTA" as a reason for concern moving forward.

The hike means that borrowers who have variable rate mortgages, credit lines and loans will have to pay more.

Full Court expected to resolve SC crisis
On whether he had a meeting or spoke with any of the four judges or the CJI, Venugopal said, "Nothing of that sort has happened". The judges had said they were discharging their debt to the nation and that addressing media was their last resort.

"At this stage, it is hard to predict the possible outcomes of trade negotiations and the timing, incidence and magnitude of their effects", the bank said in its MPR, which mentions NAFTA concerns nine times in the 21-page document.

As for trade, the central bank said the Nafta risk would hinder Canadian exporters' ability to benefit from an improving global outlook.

Canada sends roughly three-quarters of its exports to the USA, or the equivalent of 20% of total economic output.

Heading into the decision Wednesday, Scotiabank Economics forecasted three hikes totalling 75 basis points throughout 2018 and three more in 2019. The statement explaining the Bank of Canada's rationale and its economic outlook, however, contained its most explicit assessment to date about the negative fallout from Nafta's uncertain future.

Governing Council will remain cautious in considering future policy adjustments, guided by incoming data in assessing the economy's sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.

"We had thought that the stagnation of the economy net-net since the two rate hikes in Q3 (judging from the monthly GDP readings), signs of softness in house prices in Toronto and Vancouver areas, coupled with the strength of the Canadian dollar and NAFTA uncertainties would have removed any sense of urgency from the central bank", analysts at BBH wrote in a note to clients.

The BoC's qualification rate is all-important because it's used for most mortgage testing.

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