Bank of Canada poised to become the first in the G7 to hike interest rates by a half\u002Dpercentage point in its battle against rising inflation
Governor Tiff Macklem is expected to raise the central bank’s policy rate to 1 per cent on Wednesday, followed by a series of additional hikes that markets are betting will bring it as high as 3 per cent by this time next year. The Bank of Canada is also likely to use the decision, due at 10 a.m. in Ottawa, to effectively stop purchases of government bonds as it begins unwinding its balance sheet.
“They’ve been happy to be behind the curve and assume that inflation was going to abate on its own,” Jimmy Jean, chief economist at Desjardins Securities Inc., said by email. “Now they want to get policy back to neutral as fast as possible.” Trading in overnight swaps, however, suggests the Bank of Canada will be near the head of the advanced-economy pack in raising rates, buffered in part by surging commodity prices for the resource-rich nation.
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