The Bank of Canada is expected to raise its key interest rate once again next week, a move an economist at one of Canada’s largest banks says is likely a mistake.
In a report released last week, CIBC senior economist Andrew Grantham wrote that the Bank of Canada’s recent rate hike and any subsequent ones are “at best unnecessary, and at worst a mistake.”
In its summary of deliberations, the Bank noted that previous rate hikes were “not sufficiently restrictive to bring supply and demand back into balance and return inflation sustainably to the two per cent target.”“It is possible that past rate hikes are already having a bigger impact on demand than perceived, but we are focusing too much on growth rates rather than the level of spending,” he wrote.
“That would obviously be even worse in per-capita terms, given the strong population growth seen recently,” he added.
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