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Bank of Canada’s 50-bps Hike Suggests The “Peak Is Near”
Author:
Steve Huebl
Publication date:
October 26, 2022
Article Summary:
The Bank of Canada surprised markets by delivering a lower-than-expected 50-basis-point rate hike, its sixth consecutive rate increase of the year, bringing the benchmark rate to 3.75%. This decision signals potential concerns about weakening economic growth and a softening labour market. The bank acknowledged that interest rates will need to rise further, but future increases will be influenced by assessments of how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding. The Bank of Canada also released its latest Monetary Policy Report (MPR), which shows that the bank expects consumer price index (CPI) inflation to average 6.9% in 2022 and 4.1% in 2023. The bank now expects annual economic growth of 3.3% in 2022, 0.9% in 2023, and 2% in 2024. The BoC is balancing the risks of under- and over-tightening as it moves closer to the end of this tightening phase.
Keywords:
Bank of Canada, rate hike, inflation, GDP forecast, monetary policy.
Source Citation:
Steve Huebl
Bank of Canada’s 50-bps Hike Suggests The “Peak Is Near”
October 26, 2022
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