Bank of Canada could be close to the end of its current interest rate hiking cycle – RBC
25.11.2022, 16:30

Bank of Canada could be close to the end of its current interest rate hiking cycle – RBC

The Bank of Canada (BoC) could be near the end of the interest rate hike cycle, point out analysts at RBC Capital Markets. They consider the BoC will hike by 25 basis points in December. 

Key Quotes: 

“Canada looks on track to deliver a GDP reading next week that’s just above our 1% (annualized) forecast for Q3. Still, that’s a marked slowdown from the 3.2% average rate over the first half of 2022—a figure that captured much of the initial “reopening” rebound in economic activity as pandemic restrictions eased. Growth in household consumption of services continued to rise in Q3 (based on our own tracking of consumer purchases) but the pace nevertheless slowed after surging more than 16% in Q2.”

“Though labour markets surged back in October, average employment growth still slowed to under 10,000 per month over the last half a year (following softer numbers in the summer and early fall). We are looking for a smaller 5,000 position increase in employment in November and a tick up in the unemployment rate (though to a still very low 5.3% rate from 5.2% in October).”

“Slowing growth prospects and early signs of easing inflation pressures over the past months are all supportive of the view that the Bank of Canada could be close to the end of its current interest rate hiking cycle with our own base case assumption calling for one more 25 basis point increase in the overnight rate in December.”

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