Bank Of Canada Waited Too Long, Expect MUCH Higher Interest Rates: Scotiabank
One of Canada’s largest banks just made the most aggressive interest rate forecast yet. Scotiabank now sees the Bank of Canada (BoC) overnight rate hitting 3.0% by next year. The bank acknowledges it’s an aggressive call, but it’s needed to control inflation. They feel the BoC kept rates too low for too long, and now needs to play catch up.
Canadian interest rates are forecast to soar over the next few months. The bank sees the overnight rate hitting 2.5% by the end of 2022 and rising another 50 basis points (bps) in Q1 2023. It would be the highest overnight rate since before the Great Recession, with an overnight rate at 3.0%. That’s an extremely sharp increase.
“We think the BoC is falling farther and farther behind the curve. As a result, we now predict that it will raise its policy rate by an additional 2 percentage points this year, ending the year at 2.5%,” said Jean-François Perrault, the bank’s chief economist.
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