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The Bank of Canada may be near the end of its current rate hike cycle — RBC

The Bank of Canada (BOC) could be near the end of the cycle of interest rate hikes, they point out RBC Capital Markets analysts. They believe that the BOC will rise 25 basis points in December.

Notable Statements:

“Canada appears to be on track to deliver a GDP reading next week that is just above our 1% (annualized) forecast for the third quarter. Still, this is a marked slowdown from the average rate for the 3.2% in the first half of 2022, a figure that captured much of the initial rebound in economic activity as pandemic restrictions eased.Growth in household consumption of services continued to rise in the third quarter ( based on our own tracking of consumer purchases), but the pace slowed after rising more than 16% in the second quarter.”

“Although labor markets picked up again in October, average job growth slowed to below 10,000 people per month for the past half year (following softer numbers in the summer and early fall). We expect a minor increase of 5,000 jobs in November and an increase in the unemployment rate (albeit at a still very low rate of 5.3% from 5.2% in October).”

“The slower growth outlook and early signs of easing inflationary pressures in recent months support the view that the Bank of Canada may be nearing the end of its current rate hike cycle, with our own base case scenario that forecasts a rise of more than 25 basis points in the overnight rate in December.”

Source: Fx Street

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