Economists are predicting the Bank of Canada will hike its key interest rate by three\u002Dquarters of a percentage point on Wednesday.
“We may need to take more interest rate steps to get inflation back to target. Or we may need to move more quickly, we may need to take a larger step,” said Governor Tiff Macklem at a news conference on June 9.
The C.D. Howe Institute Monetary Policy Council, a group of economists who provide assessment of the Bank of Canada’s monetary policy, has also called on the bank to raise its key rate by three-quarters of a percentage point. HSBC chief economist David Watt said the Bank of Canada can bring down inflation driven by domestic factors, but when it comes to global factors such as oil prices, the bank is in a tougher spot.Article content
“If the bank goes more than 50 basis points, I think the reasoning is they want to ⦠ensure expectations don’t get too wild,” said Gordon. However, a recent report from the Canadian Centre for Policy Alternatives warned rapidly increasing interest rates will likely send the Canadian economy into a recession and could cause significant “collateral damage,” including 850,000 job losses.
On Friday, Statistics Canada said the unemployment rate in June fell to a record low of 4.9%, pointing to a strong labour market.
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