CIBC Says Bank of Canada "Getting Ready To Rumble"

According to CIBC. the Bank of Canada is "getting ready to rumble", signalling that its fight against sustained inflation will commence with interest rate hikes in the middle two quarters of the year, but with language that hints that an April move is in the cards. CIBC said while holding the policy rate at 0.25% today and maintaining bond reinvestment, the Bank's statement offset a disappointing downward revision to Q2 GDP with an "optimistic take" on momentum in Q4. It noted the potential drag from omicron and the BC floods, and those impacts and uncertainties could be key to keeping the Bank on hold in January, but could be more in the rearview mirror by the April MPR. CIBC is looking for 150 bps in total hikes over 2022-23, divided equally between those two years. CIBC noted markets went into this announcement already priced for an 'even faster run-up' in policy rates in 2022 with fewer pauses than it expects, and said what's underpriced is the likelihood that the Fed will be on a similar timetable as the BoC, given the firmer path seen for GDP and wage/price inflation stateside.