Based on a survey conducted among economists, they are of the opinion that the Bank of Canada (BoC) is on track to raise interest rates to 0.50% by the end of next year.
The majority of respondents are of the opinion that the interest rate hike for the first time is likely to happen sooner than expected. At the same time, policymakers are expected to maintain interest rates at the September 8 meeting.
The BoC is likely to cut its weekly asset purchase program by $ 1 billion Canadian dollars in October based on the expectations of a majority of economists. It will be announced once with the next quarterly projection update on economic growth and inflation forecasts.
At this point the Canadian economy is facing challenges with a significant contraction of 1.1% recorded in the second quarter. On that basis, most are of the view that there will be at least one rate hike in the fourth quarter of 2022.
A contraction of 0.4% in July with the opening of the economy from the pandemic has prompted caution among policymakers.
Nick Bennenbroek, an international economist at Wells Fargo (NYSE: WFC) argues that inflation has risen significantly despite short -term growth in the economy. However, immediately the overall economic recovery is on track. Thus, if inflation soars higher then there is a tendency for interest rate hikes to be implemented earlier.
The closest event is the early federal elections scheduled for September 20. Yet the majority of economists are of the opinion that this will not have a major impact on the economy.
