- Prior rate was 3.75% after 50 bps on October 23
- Economists widely expected a 50 basis point rate cut
- The market was pricing in a 90% chance of a rate cut
- Prior statement said " If the economy evolves broadly in line with our latest forecast, we expect to reduce the policy rate further" but that was dropped
- Statement says "Going forward, we will be evaluating the need for further reductions in the policy rate one decision at a time"
- Statement says "Governing Council has reduced the policy rate substantially since June."
- Macklem statement says "with the policy rate now substantially lower, we anticipate a more gradual approach to monetary policy if the economy evolves broadly as expected.
USD/CAD was trading at 1.4182 ahead of the report compared to the four-year low of 1.4194. The next Bank of Canada rate decision is on Jan 29 and market pricing suggested a 50/50 chance of a cut prior to today's decision.
There's a clear signal here that they don't intend to continue to cut in 50 basis point increments but plan to continue to ease rates.
This article was written by Adam Button at
www.forexlive.com.
