The Bank of Canada will announce its July monetary policy decision on Wednesday. Markets expect the central bank to raise borrowing costs by 25 basis points to 5.0%, the highest level since 2001, as part of the ongoing fight against persistently high price pressures. If confirmed, the move would mark the second consecutive quarter-point hike, following a brief hiatus earlier in the year.
Rather than focusing on the rate decision itself, traders should pay more attention to forward guidance and general comments about economic prospects. With the Canadian economy holding up better-than-expected, labor markets resilient and core inflation struggling to come down, the institution led by Tiff Macklem may be inclined to leave the door open to further tightening in the coming months.
