OTTAWA — Momentum in the Canadian economy is spurring speculation that a rate hike is on the way, but economists don’t expect the Bank of Canada to pull the…
Orlando said the data suggests a resurgence in growth, rather than a slowdown, especially given consumer spending rebounded during the first quarter.
Desjardins chief economist Jimmy Jean agrees that a rate hike is more likely to come in the summer, which would give the central bank some time to assess inflation pressures. But members of the governing council were already discussing raising interest rates at their last decision meeting in April. According to the summary of deliberations, “the resilience of economic growth” was one of the rationales for a rate hike.
Wages in April were also up 5.2 per cent compared to a year ago, outpacing price growth. The Bank of Canada has argued that the unemployment rate, along with the current pace of wage growth, are not sustainable and will making fighting inflation harder. “When you really take the bigger picture of what’s happening in core inflation, I don’t think it’s something that the Bank of Canada is sleeping comfortably just yet,” Jean said.
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