The Financial Post reports in its Thursday, Sept. 8, edition that the Bank of Canada's rate hike on Wednesday matched economists' expectations as most were anticipating a hawkish 75-basis-point hike. The Post's Stephanie Hughes writes that Desjardins Securities managing director Royce Mendes said in a note last week that as inflation begins to plateau, central bankers will need to remain vigilant.
"Expect to see the effects of restrictive policy showing up more clearly this fall and winter, giving the central bank the green light to pause rate hikes," Mr. Mendes wrote, adding that the economic impacts seen from rising rates so far were only the tip of the iceberg.
With more rate hikes expected, Mr. Mendes said the bank will have to drop any facade of a soft economic landing.
"The lags in monetary policy mean that the economy has only felt a fraction of the pain from higher interest rates," Mr. Mendes said in a Wednesday note to clients. "But, with the BOC making no mention that the current 3.25 per cent policy rate is above their long-term neutral rate range, central bankers might be coming around to realizing that measuring whether this is restrictive territory or not will be difficult this cycle."
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