The Bank of Canada’s preferred core inflation measures have trended higher and are close to the 2% inflation target. Despite the drop in headline inflation in January, the core inflation data will reinforce market expectations of yet more interest rate hikes this year. We expect one more rate increase, most likely at the April policy meeting. Looking further ahead, we still expect the pace of economic growth to slow significantly due to unintended consequences of tighter housing policies and credit conditions. If we are correct, then the Bank would have no other choice but to reverse course and cut interest rates.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services