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Tomorrow at 2:00 pm GMT the Bank of Canada (BOC) will publish its monetary policy decision and updated economic forecasts for the month of October.

In addition to that, Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will also conduct a presser at 3:15 pm GMT.

Think you’re ready to trade the event? Here are points you need to know:

What happened last time?

As expected, the central bank kept its rates at 1.50% in September after raising it from 1.25% in July.

BOC members believed that the economy was still in line with their July projections even as “uncertainty about trade policies” weighed on businesses.

On inflation, Poloz and his team expect prices to move back from 3.0% to a 2.0% growth in 2019 as “effects of past increases in gasoline prices dissipate.

What REALLY caught traders’ attention was BOC removing the “gradual approach” bit from their July release. Unfortunately, the prospect of a faster pace of rate hikes was overshadowed by NAFTA concerns at the time.

CAD 1-Hour Forex Charts
CAD 1-Hour Forex Charts

What are traders expecting this time?

Market geeks expect the BOC to raise its rates to 1.75%, its third this year. And why not?

Early last month Deputy Governor Carolyn Wilkins backed the official statement and revealed that the BOC gang had discussed whether their gradual approach “remains appropriate.”

She added that (emphasis mine):

“It is a natural question to ask, given that the economy has been operating at potential for the past year and it is in this part of the cycle when interest rates typically rise to preempt a buildup in inflation pressures.

In the same speech, Wilkins pointed out that “protectionist measures create risks to the upside for inflation,” and that “low and stable inflation will help reduce at least one uncertainty for companies and household.” Talk about spoilers!

Before you buy the Loonie like there’s no tomorrow, though, you should note that BOC members might not be too hawkish even if they do raise their rates this week.

For one thing, last week’s CPI release was a big miss, with the annualized reading cooling down from 2.8% to a four-month low of 2.2% when analysts had expected a 2.7% uptick. BOC’s preferred inflation measures (trimmed, median and common CPI) also stayed around 2.0%.

Central bank members might want to adjust for the uncertainties that they mentioned last month that are still present today.

While NAFTA-related friction has turned into a USMCA deal, uncertainties such as global trade tensions, financial stresses in emerging economies, and lower commodity prices (lower oil prices put less upward pressure on consumer prices) could still affect Canada’s economic growth.

Oh, and don’t forget to consider these risks ahead of the event:

Buy the rumor, sell the news

With the rate hike all but priced in, rate hike junkies who have bought the Loonie can sell their positions and move on to other catalysts as soon as the BOC publishes its decision.

Other market movers

Last month’s release showed that other events could affect the Loonie’s intraday price action. Oil-buying ahead of Iran’s sanctions, for example, could boost the Loonie higher and faster during the release.

On the other hand, factors such as positioning ahead of Friday’s U.S. GDP release, Italy’s debt concerns, and potentially market-moving tweets from Trump (yes, this is a thing now) could put BOC’s decision in the sidelines.