The Bank of Canada is widely expected to deliver yet another disproportionate interest rate hike next week, pushing its policy rate into restrictive territory for the first time in 20 years. Some economists believe the Canadian central bank may suggest a halt following its expected rise on September 7.
This would be the fourth significant rate rise this year, bringing the total tightening to 300 basis points since March. In July, Canadian inflation fell to 7.6% from 8.1% in June, while the unemployment rate fell to a historic low of 4.9%. Money markets expect two quarter-point rate rises after September, bringing the policy rate to 3.75% by the end of the year.
Already chastised for acting too slowly when inflation began to rise last year, the central bank may be tempted to adopt a more restrictive attitude.