Another rate hike would mean more pain for mortgage holders, particularly homeowners with variable-rate mortgages or fixed-rate mortgages that are coming up for renewal
. And the pace of hourly wage growth, a key variable for inflation, particularly in the service sector, slowed to 4.2 per cent from 5.1 per cent in May.
Consumer price index inflation continues to march lower, dropping to 3.4 per cent in May from 4.4 per cent in April. That’s a long way from the four-decade high of 8.1 per cent reached last summer, and only a few ticks above the upper end of the central bank’s inflation-control band.. Measures of “core” inflation, which strip out volatile components such as energy and food, are proving stickier.
Interest rate increases work with a considerable lag. That raises the risk that the Bank of Canada will overdo it, stepping on the monetary policy brakes just as the economy is taking a turn for the worse., said he doesn’t think another rate is necessary to guide inflation back down to two per cent. However, he believes the central bank will raise rates again this week, based on its hawkish communications at the June meeting and the strength of the latest jobs data.
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