Economists predict the Bank of Canada will raise interest rates for an eighth consecutive time with a final “insurance” hike on Wednesday before easing off its aggressive tightening policy cycle.
, though at 6.3 per cent the annual rate is still well above the central bank’s target of two per cent. University of Toronto economics professor Angelo Melino also anticipates that a 25bps hike is the most likely outcome this week, with the very slight chance for a 50bps increase and “a small but significant probability that they don't do anything.”Since last March, the Bank of Canada has hiked interest rates seven times in a row. The central bank indicatedthat it would start considering whether it would to raise rates at all, rather than by how much.
“Even though inflation has started to ease, it doesn't really give them comfort that they can get down to the two per cent target if they have a faster growing economy than they expected and a tighter labour market than they than they anticipated,” he said in a phone interview on Tuesday. from COVID-19 or other respiratory conditions, positing that the phenomenon has forced employers to hire more to keep up with demand.
“There's no doubt that the bank has a credibility problem,” he said in a phone interview on Tuesday. “People are paying a lot more attention to what the bank says and what the bank does.”
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