The Bank of Canada is expected to implement a second consecutive interest rate hike in July after data showed strong economic growth, a tight labor market, and resilient inflation.
In June the bank raised its rate by a quarter percentage point, reaching a 22-year high of 4.75% following a five-month pause. This month, the Canadian central bank is expected to implement another quarter-point hike.
“While the data released since the June meeting suggests that the economy has cooled on the margin, the details have been uniformly stronger,” Jay Zhao-Murray, FX analyst at Monex Canada explained before confirming his firm’s expectation that the interest rate will be raised to 5% in July.
Of the 24 economists surveyed by Reuters on the matter, 20 expect the Bank of Canada to raise its interest rates by a quarter percentage point.
While the central bank aims to get Canadian inflation down to 2%, it is also wary that too many rate hikes could send the economy into a recession; another outcome that the Bank of Canada is looking to avoid.