TD Sees "Room" For Bank of Canada To Reduce Monetary Policy Support

Sri Thanabalasingam, Senior Economist at TD, noted the Bank of Canada "mostly" kept its communication unchanged from the October Monetary Policy Report. He said today's announcement showed that despite recent gains in the labour market, the Bank is sticking to its forward guidance from October, partly perhaps as a result of the uncertainty created by the Omicron variant.

If Omicron proves to be less of a health concern than initially feared, especially for vaccinated individuals, the Bank could change its messaging in the near future, he added. "Indeed, with inflation running hot, and the labour market on solid footing, there is room to reduce monetary policy support."