Instant View: Bank of Canada first in G7 to hike rates
TORONTO (Reuters) - Canada became the first of the G7 major industrialized countries to begin hiking interest rates following the global financial crisis, raising its key rate on Tuesday by a quarter-point to 0.50 percent.
MILLAN MULRAINE, ECONOMICS STRATEGIST AT TD SECURITIES
"It's certainly not a surprise to us and to the markets that the Bank of Canada did increase the policy rate but I think they were slightly more cautious, more dovish, than expected, in particular in noting that further rate hikes will be weighed carefully against domestic and global economic developments. Of course we continue to mention our bias for them to raise rates at the next few meetings. We expect 25 basis points but much of that will be based on a cautious assessment of not only domestic but global developments."
"No surprise in the decision but the tone was slightly more dovish than we or the markets had anticipated. It certainly suggests to us that the bank is not positioning for 50 basis point increases at least not in the near term as the market at some point may have priced in."
DOUG PORTER, DEPUTY CHIEF ECONOMIST WITH BANK OF MONTREAL
"The overall message is this: the Bank is sending a signal that this is not necessarily the start of a relentless campaign to crank interest rates higher. They will take this one step at a time."
"The last line (of the Bank's statement) is arguably the most important ... 'Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments' ... That's about as cautious language as you could ask for and I think they are being very deliberate in trying to talk to markets that are pricing in a whole series of rate hikes, regardless of the background." Continued...