Bank of Canada (BoC) - As Housing Activity Sinks, the Bank of Canada Blinks

The Bank of Canada hiked the overnight rate by 50 bps today, coming in below market expectations, tempering the pace of rate increases following 100 bps and 75 bps increases in July and September, respectively. Is this the pivot markets, businesses and homeowners have been waiting for? It looks like it could be. With monetary policy acting with long and variable lags, the Canadian economy hasn’t yet felt to full impact of interest rate hikes this year and the risks remain tilted to the downside. As such, we believe the Bank of Canada will revise its forecast for Canadian real GDP growth for 2023 lower at its January meeting, bringing it closer to our recessionary forecast.