FOMC officials remain hawkish. Bank of Canada will hold rates longer than the market expects
On Tuesday, Federal Reserve President Cleveland Mester made somewhat hawkish comments and supported the dollar, saying she was in no rush to cut interest rates and that policymakers would likely gain confidence to cut rates "later this year" if the economy performs as expected. Markets rate the odds of a 25 bps rate cut at 23% for the March 19-20 FOMC meeting and 82% for the April 30-May meeting.
Bank of Canada Governor Tiff Macklem said Tuesday that monetary policy needs more time to ease price pressures and warned that the biggest driver of rising prices - housing costs - cannot be tamed by borrowing costs. Canada's severe housing shortage has driven up the cost of buying or renting real estate in the country. Macklem said housing costs are now the most significant contributor to above target inflation.
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