Posthaste: Tiff Macklem take note — markets have so far correctly called interest rate hikes, says analyst - Financial Post

An analyst cited by the Financial Post suggests that market pricing has, so far, correctly anticipated interest rate hikes — a point framed as a note to Bank of Canada Governor Tiff Macklem. The observation matters because central banks and investors both treat market-implied rate expectations as a real-time gauge of how policy is likely to unfold.

For markets, the takeaway is about credibility and signalling. If rate expectations embedded in bond yields and related instruments have tracked actual decisions reasonably well, that implies participants are reading the central bank's reaction function — how it weighs inflation against growth — with some accuracy. That can reduce the risk of abrupt repricing when decisions arrive.

What to watch: whether this track record holds as the economic backdrop shifts. Market-implied paths are not forecasts, and they can diverge from policy if inflation, employment or growth data surprise. For observers, the useful lens is not whether markets are "right," but how closely expectations and central bank communication stay aligned — and what a breakdown in that alignment would signal for borrowing costs and asset prices.