Analysts at Goldman Sachs offer a sneak peek at what to expect from Wednesday’s Bank of Canada’s (BOC) interest rate decision due at 1400 GMT.
Key quotes
"We expect the BoC to act "more forcefully" and hike the policy rate by 75bp this week to 2.25%. Beyond this week, we expect another 75bp hike in September, 50bp hikes in October and December, and a 4.25% terminal rate reached in Q1 2023.”
“The main drivers of our hawkish BoC call are that we expect headline CPI inflation to remain above 7% this year and for the BoC to respond aggressively to any signs of entrenched inflation.”
"Risks to our hawkish terminal rate forecast are to the downside. A more significant US growth slowdown or a crash in the housing market would likely mean that the BoC hikes less in December and January than we expect."
