On January 25, the Bank of Canada hiked rates by 25 bps to 4.50% in what looked like the end of the rate-hiking cycle.
"If economic developments evolve broadly in line with the MPR outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases," the statement read.
The conditional pause might not last six weeks.
The rates market is now pricing in a 25% chance of a 25 bps hike on March 28 in what would be yet-another embarrassing misstep from Tiff Macklem.
That probability largely hangs on today's CPI and retails sales reports. The consensus on the CPI headline is +0.7% m/m and +6.1% y/y with core at +0.2% m/m and +5.5% y/y.
Retail sales will be overshadowed by inflation but the consensus is +0.5% m/m on the headline and -0.1% ex-autos.
Expect significant CAD swings today on the numbers; USD/CAD was last flat on the day at 1.3457.
