BoC expected to raise rates again this week, vying to quash inflation faster

The Bank of Canada is expected to raise interest rates again this week as forecasters say the economy has not softened enough for the central bank to back off.

The Bank of Canada is expected to raise interest rates again this week as forecasters say the economy has not softened enough for the central bank to back off.

The interest rate announcement is scheduled for Wednesday, just over one month after the central bank hiked its key rate by a quarter of a percentage point, bringing it to 4.75 per cent.

The June decision brought an end to the Bank of Canada's pause on rate hikes after a string of hot economic data prompted concerns that rates were not high enough to bring inflation back to its two per cent target.

Deloitte's chief economist, Dawn Desjardins, said there have been some recent signs that the economy is taking a turn, with the latest job report for June showing the unemployment rate rising and wage growth slowing.

But the overall picture suggests inflation is still sticky, wage growth is high and the economy continues to churn, she said.

"I do think that we are seeing things shift. Are they shifting fast enough for the Bank of Canada? Perhaps not," Desjardins said.

The Bank of Canada has stayed mum on what it plans to do in July, offering little forward guidance to financial markets. Instead, it has said the governing council would make its decision based on incoming economic data.