The Bank of Canada (BoC) will announce its monetary policy decision at 14:00 GMT. Economists at ING expect the BoC to hike by 75 bps and to maintain a hawkish tone for future tightening. However, the loonie is unlikely to benefit.

75 bps hike seen in Canada

“75 bps appears to be the call from both economic consensus and the market, and we therefore think forward-looking language will drive most of CAD's reaction today. There’s surely a risk the BoC will refrain from offering any strong hint on future policy, but a reiteration that more substantial tightening is needed could be enough to see markets push their expectations for peak rates from the current 3.8% to 4%+.”

“CAD is currently going through a rough period, and any support from the BoC today may fade rapidly. However, aggressive tightening by the central bank does raise the upside potential for the loonie beyond the short-term, when a stabilisation in sentiment and solid fundamentals may allow it to recover.”

See – BoC Preview: Forecasts from eight major banks, hiking rates again