Most economists are now forecasting a rate hike of three-quarters of a percentage point, following the lead of the U.S. Federal Reserve, which hiked its key rate by that amount last month
“With the economy essentially at full employment, wages starting to stir meaningfully, and headline inflation poised to test eight per cent in this month’s consumer price index report, the Bank of Canada’s task is clear at next week’s decision,” wrote BMO chief economist Douglas Porter in a weekly report on Friday.
The Bank of Canada has identified both domestic and international factors leading to soaring inflation. Domestically, the bank says there’s excess demand in the economy, while globally, supply chain problems and the war in Ukraine continue to put upward pressure on prices. Laval University economics professor Stephen Gordon said the primary reasoning behind a larger rate hike would be to rein inflation expectations.
Economists become concerned when people and businesses start anticipating high inflation, as expectations impact future pricing of goods and services as well as pay negotiations. “I don’t think we’re anywhere near that risk yet, because the policy rate is still low and the economy is running really well,” Gordon said.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Bank of Canada to hike key interest rate by 0.75%, economists sayEconomists are predicting the Bank of Canada will hike its key interest rate by three-quarters of a percentage point on Wednesday as inflation rages on globally.
Read more »
Posthaste: Bank of Canada fumbled its mid-pandemic policy response, economists sayEconomists at Desjardins gave the Bank of Canada a passing grade over top marks for its pandemic response in a report card. Here\u0027s why.
Read more »
Soaring inflation expectations raise odds of super-sized Bank of Canada hikeBank of Canada\u0027s latest surveys of business and consumer expectations show growing doubt about its ability to put a lid on inflation
Read more »
Soaring inflation expectations raise odds of super-sized Bank of Canada hikeBank of Canada\u0027s latest surveys of business and consumer expectations show growing doubt about its ability to put a lid on inflation
Read more »
Soaring inflation expectations raise odds of super-sized Bank of Canada hikeBank of Canada\u0027s latest surveys of business and consumer expectations show growing doubt about its ability to put a lid on inflation
Read more »
Canadians flocked to variable-rate mortgages ahead of Bank of Canada rate hikes, CMHC saysICYMI: Canadians flocked to variable-rate mortgages ahead of Bank of Canada rate hikes, CMHC report shows — via financialpost RealEstate Mortgages
Read more »