Bank of Canada to hike key interest rate by 0.75%, economists say
CTV
Economists are predicting the Bank of Canada will hike its key interest rate by three-quarters of a percentage point on Wednesday as inflation rages on globally.
Economists are predicting the Bank of Canada will hike its key interest rate by three-quarters of a percentage point on Wednesday as inflation rages on globally.
In Canada, inflation hit a 39-year-high of 7.7 per cent in May -- well above the two per cent target rate central banks typically aim for.
The Bank of Canada raised its key interest rate by half a percentage point on June 1, bringing it to 1.5 per cent. Since then, it has signalled a willingness to move in a more aggressive direction.
"We may need to take more interest rate steps to get inflation back to target. Or we may need to move more quickly, we may need to take a larger step," said Governor Tiff Macklem at a news conference on June 9.
Most economists are now forecasting a rate hike of three-quarters of a percentage point, following the lead of the U.S. Federal Reserve, which hiked its key rate by that amount last month.
"With the economy essentially at full employment, wages starting to stir meaningfully, and headline inflation poised to test eight per cent in this month's consumer price index report, the Bank of Canada's task is clear at next week's decision," wrote BMO chief economist Douglas Porter in a weekly report on Friday.
The C.D. Howe Institute Monetary Policy Council, a group of economists who provide assessment of the Bank of Canada's monetary policy, has also called on the bank to raise its key rate by three-quarters of a percentage point.
