Just last month economists were almost evenly split on the risk of higher rates; now nearly all are saying sooner rather than later
That shift in view, based on intensifying inflation pressures — owing to global supply chain bottlenecks, labour shortages and rising energy costs — is increasingly shared by forecasters around the world.
The odds are increasingly stacked in favour of earlier and more aggressive policy tightening next yearThat view is in line with the central bank’s latest Business Outlook Survey, which reported firms anticipating stronger demand as the COVID-19 pandemic fades, but supply constraints threatening to limit sales and raise costs.Article content
While the median view of economists in an Oct. 18-22 poll showed the BoC would keep rates unchanged at 0.25 per cent through the first half of next year, rates are expected to rise by 25 basis points to 0.50 per cent in the third quarter.Forecasts from economists on whether rates will go up in Q3 were on a knife’s edge. But the risk to their expectations was clear: 90 per cent of respondents, or 18 of 20, said a BoC move would come earlier rather than later.
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