Shenfeld says the Bank of Canada is also in a tough spot because of what the data hasn’t shown: any weakness in the labour market.
An uptick in the unemployment rate means more people lose their jobs, but it can also moderate wage inflation, which Shenfeld says is something the Bank will be looking to keep in check as it attempts to get price pressures all the way back down to two per cent. Between Wednesday’s meeting and the Bank’s next decision on July 12, the Bank of Canada will get a few more data prints to see how the economy is faring under the weight of the rate hikes to date.
Leaving the benchmark interest rate on hold but giving a “stern warning” about more rate increases coming can actually act to stifle economic growth in and of itself, he adds, as Canadians plan for higher rates by spending less and fixed mortgage rates rise to anticipate the move.Bartlett, too, believes the Bank of Canada will strongly signal possible additional hikes on Wednesday, but not increase its policy rate just yet.
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Source: TheTorontoSun - 🏆 23. / 68 Read more »