The central bank has already raised the benchmark overnight rate to 2.5%; another three-quarter-point hike to 3.25% is expected next week
A wide-ranging Bloomberg survey of 21 economists on Bank of Canada policy found that the central bank took a credibility hit with a late response to inflation. But its decision to shift course and tighten policy aggressively may wrangle price pressures down quickly, they said.
And once inflation begins to abate, the central bank will fine-tune rates back to more neutral settings below 3% without a sharp reversal in policy. Macklem and his officials have already raised the benchmark overnight rate to 2.5% from 0.25% in March. Economists expect another three-quarter-point hike to 3.25% at a policy decision next week. Of the 21 analysts surveyed, two believe the Bank of Canada will stop there, while 11 said the hiking cycle will end with one last move in October.
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