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Bank may welcome strong loonie after inflation spike

The Bank of Canada has voiced concern about the loonie although, following the signs of emerging inflationary pressures in April, it will probably be more welcoming of the disinflationary impact of the strong currency. Either way, the Bank’s concern about the strength of the loonie and its disinflationary impact are reasons to think that markets are too aggressive in pricing in policy rate hikes by mid-2022.

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