Week Ahead: Fed, BoC To Sing From Same Hawkish Hymn Sheet; Data Flurry On The Way
XM Group | Jan 21, 2022 09:02AM ET
BoC rate hike: no point in waiting
The Bank of Canada will be the first major central bank to hold its first policy meeting of 2022 on Wednesday and it’s looking like it will be an exciting one. Rate hike bets have been intensifying all week and a 25-basis-point increase is now about 85% priced in. Expectations of a move as soon as the January meeting were reinforced by the latest CPI data that showed annual inflation hit a 30-year high of 4.8% in December.
In neighbouring New Zealand, inflation will also be front and centre. The country’s quarterly CPI prints are out on Thursday and there could be another spike in headline inflation, which had jumped to 4.9% y/y in Q3.
The Reserve Bank of New Zealand doesn’t meet until February 23. But with a quarter-percentage point rate hike already fully priced in for each of the RBNZ’s meetings this year, the only thing that can be a game-changer for the struggling New Zealand dollar is if the figures are strong enough to open the door for half-point increases.
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