Rates as of 0530 GMT

Market Recap

The Bank of Canada BoC hiked 50 bps again, as was widely almost unanimously expected only one person out of 30 surveyed by Bloomberg said 25 bps and that was a guy working for a Thai bank in Bangkok so maybe not the best insights into the Canadian economy. Moreover, they ratcheted up their forward guidance, hinting at further rate hikes to come.

Their forward guidance after the April meeting read

With the economy moving into excess demand and inflation persisting well above target, the Governing Council judges that interest rates will need to rise furtherThe timing and pace of further increases in the policy rate will be guided by the Banks ongoing assessment of the economy and its commitment to achieving the 2 inflation target.

This time though they changed it to read

With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the Governing Council continues to judge that interest rates will need to rise further The pace of further increases in the policy rate will be guided by the Banks ongoing assessment of the economy and inflation, and the Governing Council is prepared to act more forcefully if needed to meet its commitment to achieve the 2 inflation target. emphasis added

Note too what was left out no longer is the economy seen to be moving into excess demand. On the contrary, they specifically said earlier that Canadian economic activity is strong and the…