ICYMI: Economists weigh in on Bank of Canada’s first 50-point hike in more than two decades — via financialpost ratehike RealEstate Mortgages Economy
Economist Royce Mendes from Desjardins Group saw the aggressive move — which included announcing that the central bank would begin quantitative tightening, or reducing the amount of government bonds held on its balance sheet, effective April 25 — as an acknowledgement of the need to move “forcefully” to combat rising prices and return rates to more neutral levels., according to consumer price index readings.
“These revisions come as little surprise given all that’s transpired since the previous estimates were released in January,” Mendes wrote. Desjardins sees room for further tightening into next year, but did not think the Bank of Canada would keep pace with the U.S. Federal Reserve, which is expected to take rates above three per cent.
In a note Wednesday morning, Ashworth argued that housing vulnerabilities would keep the Canadian central bank’s hands tied, and that it would likely struggle to get the policy rate much higher than the two per cent mark. The Fed, by comparison, is expected to bring the Fed Funds Rate to a peak of 3.38 per cent.Article content
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