Hawkish bias likely to be scratched early next year

We expect the Bank of Canada to retain its tightening bias in next week's policy statement. With the euro-zone taking a temporary step back from the brink and US consumers spending more freely, the Bank's warning that its policy rate will eventually need to be hiked from the current 1.0% is still just about defensible. A hint of higher rates in the future also helps to divert criticism that the Bank isn't doing enough to dampen the boom in household debt, which now looks eerily similar to the run-up in the US during its housing bubble.