USD/CAD: BoC’s 50 bps hike could spark knee-jerk buying in the Loonie – SocGen

The Bank of Canada (BoC) is expected to raise its policy rate by 50 basis points to 4.25%. Such a decision could spark knee-jerk buying in the Loonie, economists at Société Générale report.

BoC rate decision is a toss-up between 25 bps and 50 bps

“The BoC rate decision is a toss-up between 25 bps and 50 bps today but we suspect the bank may opt for the latter after GDP growth surpassed expectations in 3Q thanks in part to strong exports.” 

“Money markets are pricing in about 33 bps today so 50 bps to 4.25% or 125 bps above 2-3% neutral rate band would be a surprise and could spark knee-jerk buying in the Loonie.”

See – BoC Preview: Forecasts from nine major banks, very close call