Bank of Canada to deliver a 75 bps hike to 3.25% on Wednesday – Wells Fargo
05.09.2022, 16:59

Bank of Canada to deliver a 75 bps hike to 3.25% on Wednesday – Wells Fargo

The Bank of Canada (BoC) will have its monetary policy meeting on Wednesday. A rate hike of 75 basis points is expected. Analysts at Wells Fargo think the BoC will slow down the pace of its hikes beyond September, only taking the policy rate to 3.75% by the end of the fourth quarter.

Key Quotes: 

“The Bank of Canada (BoC) will also have its September monetary policy meeting on Wednesday. The BoC has embarked on one of the more aggressive tightening cycles among the G10 countries, and there are some hints the effects of tighter monetary policy might be starting to cool inflation down. Headline inflation in Canada decelerated to a 7.6% year-over-year pace in July, driven by falling commodity prices. However, the average of three core inflation measures ticked up to 5.3%, indicating that underlying price pressures still remain elevated for now.”

“After a jumbo 100 bps rate hike in July, we expect the BoC to deliver a 75 bps hike to 3.25% at its September meeting. We think the BoC will slow down the pace of its hikes beyond September, only taking the policy rate to 3.75% by the end of Q4-2022, although we see the risks as remaining tilted to a higher peak. We will be particularly interested in guidance on future policy from the BoC, especially against a backdrop of slowing growth and still-elevated inflation.”

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