Bank of Canada increases rates by 50 bps, says hikes may be over

TORONTO (Reuters) - The Bank of Canada on Wednesday hiked its benchmark overnight interest rate by 50 basis points to 4.25%, the highest level in almost 15 years, and signaled the tightening campaign was near an end.

STORY:

MARKET REACTION: CAD/

LINK:https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/

COMMENTS

STEPHEN BROWN, SENIOR CANADA ECONOMIST, CAPITAL ECONOMICS

"The Bank of Canada delivered a somewhat dovish 50 basis point policy rate hike today by softening its explicit forward guidance that interest rates will need to rise further. We would not rule out a final 25 basis point interest rate hike in January, but the Bank is very close to the end of its tightening cycle."

"For now, we assume that the resilience of the labour market and a desire not to send too dovish a message will cause the Bank to enact one final 25 basis point hike in January. But with Canadian oil prices tumbling below $50 in recent days, almost 40% lower than the Bank assumed in its October Monetary Policy Report, it would not be a complete surprise if today marks the last hike in this cycle."

DARCY BRIGGS, PORTFOLIO MANAGER, FRANKLIN TEMPLETON CANADA

"It was always a coin flip."

"They are definitely front loading their rate hikes. There may be one yet to come in January ... it will be data dependent would be our guess at this point."

"It looks like markets have taken it a little more hawkish than expected but our take is we're in the last throes of the rate tightening cycle and moving pretty close to a hold."

(Reporting by Fergal Smith; Editing by Denny Thomas)