Canada’s central bank is expected to raise its key overnight rate, the fifth rate-hike this year, as the Bank continues to struggle with inflation.
In ordinary times, the Bank of Canada hiking interest rates by three-quarters of a percentage point all at once would be shocking.
A slightly smaller one than the July hike is in the cards this time around, predicted National Bank Financial’s Taylor Schleich. Another key predictor of what the Bank might do — or, at least, what investors are expecting — is the yield on the Canadian government’s five-year bond. As of Friday afternoon, that was at 3.26 per cent, pointed out James Laird, co-founder of Ratehub.ca. A 75-basis-point hike would bring the overnight rate to 3.25 per cent.
“We’ve heard from the governor that the Bank feels inflation may have peaked. But the fact is we’re still going to see some pretty solid numbers with core inflation,” said Antunes, referring to the non-energy part of the CPI.“We’re skeptical inflation will melt away quickly,” said Porter. “We’re still probably going to be north of seven per cent on headline inflation and that’s far too high for anyone’s comfort, and it means the bank can’t relax.
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