It took some time, but Bank of Canada Governor Stephen Poloz and Bay Street finally seem to understand each other.
The biggest surprise around the Canadian central bank’s decision to raise interest rates on January 17 might have been how calmly the markets absorbed the shift in policy. Unlike last year’s consecutive increases in July and September, most traders saw this one coming.
The chief economists at Canada’s seven biggest banks all correctly predicted the move; prices for financial assets tied to short-term interest rates implied an 80 percent probability that the Bank of Canada would raise its benchmark a quarter point, which it did.
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