The Financial Post reports in its Friday, Oct. 21, edition that the Bank of Canada is expected to hike its interest rate next week. A Reuters dispatch to the Post reports that another 75-basis-point move up is expected at the BOC's Oct. 26 meeting. That would take its policy rate to a 14-year high at 4 per cent on top of 300 bp worth of increases since March. Reuters says economists, consumers and businesses are increasingly certain the economy will be in recession in the next 12 months. CIBC economist Karyne Charbonneau says, "The Bank of Canada has clearly not slayed the inflation dragon yet." CIBC and other banks revised up their rate hike calls to 75 bp from 50 bp after the data. Reuters says that while rapid rate increases have tamed at least one beast -- Canada's hot housing market as prices are down 21.6 per cent from a February peak -- it is not yet enough for the BOC. Governor Tiff Macklem said last week the economy remains overheated and higher rates are needed to cool it. He said it can be done without triggering a recession. TD Securities' Andrew Kelvin says the BOC wants to restore its "credibility and bring inflation lower." He says, "If that requires a recession, then so be it."
© 2023 Canjex Publishing Ltd. All rights reserved.