The Bank of Canada is well on the way to policy normalisation. It has already slowed the $5bn of weekly QE asset purchases to $2bn and repeatedly signalled it will start raising rates “in the second half of 2022” when inflation, on the BoC’s forecasts, consistently hits 2%. However, the recent news flow has not been great and we could hear a slightly more dovish take at next Wednesday’s policy meeting. After all, a surprise negative 2Q GDP print (-1.1% versus 2.5% expectations) combined with rising Covid cases suggests that the output gap may take longer to close. The softer figures combined with the proximity to ... (full story)