(May 15 – 09:20ET) – All the focus is now on tomorrow’s U.S. Federal Reserve Board meeting, with the big question being whether rates are going up 25 basis points or 50.

CIBC World Markets senior economist Avery Shenfeld says it’s a matter of style, not substance, whether the Fed goes 25 or 50. He argues that either way the Fed will tighten again so the increment itself is inconsequential. That said, CIBC says it is less certain than the market that the Fed will go for 50 bps.

RBC DS Global Markets economists are wavering, too, thanks to a string of benign data releases. One way or another, it sees 75 bps in the cards in coming months.

CIBC believes the Bank of Canada will simply follow the Fed, noting that this Thursday’s policy report release made the case for future hikes from the Bank. “Expect the Bank of Canada to match whatever the Fed delivers. And like the Fed, whether that’s 25 or 50 basis points, it won’t be the last we hear from the Canadian central bank this year.”

Apart from the rate decision, Canada will have a busy week for economic data this week, including the release of the Consumer Price Index. But it will likely spark little reaction with rate hikes certain anyway.
-IE Staff