The sooner the central bank stops adding support to the economy, the faster they are expected to pivot to a tightening cycle
. Investors are anticipating the Bank of Canada will start raising interest rates within the next six months, with markets pricing in four rate hikes next year.Article content
The central bank has already increased its bond holdings by about $350 billion since the start of the pandemic. It started buying $5 billion a week initially in the secondary market but has since tapered those purchases three times to bring it to the current pace of $2 billion.Article content Macklem has also been promising not to raise the benchmark interest rate until the recovery is complete. The bank’s last forecasts in July didn’t see that happening until the second half of next year.“The Bank of Canada will turn more vigilant on inflation risks at Wednesday’s meeting. Though communications should prove hawkish relative to September, the BoC may lean against growing market expectations for a hike as early as April 2022.
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