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Reuters poll: majority of economists expect Bank of Canada to hike to 2.50% on Oct 28
19 of 34 economists polled expect a 25bp hike next week, the first move in a year, as September inflation hit 3.1%.
Why it matters
In a Reuters poll of 34 economists taken Oct 21-23, 19 (56%) expect the Bank of Canada to raise its overnight rate by 25 basis points to 2.50% on October 28 - its first move in a year - followed by one more hike by the end of March. This is a market expectation, not a decided fact.
The driver is inflation: September CPI rose to 3.1%, just above the bank's 1%-3% target range, and the BoC's latest business outlook survey showed sharply rising inflation expectations in the run-up to a breakdown in trade talks with the United States.
Details
Governor Tiff Macklem's weekend remarks to reporters were read by markets as a hike hint, and many economists changed their call from a hold to a hike this week. Royce Mendes, managing director and head of macro strategy at Desjardins, said the same business and consumer survey results drove both the shift in the governor's tone and the change in his own view: the responses point to more serious inflationary pressures ahead.
Rate futures have repriced accordingly: October hike odds rose from about 30% to around 75%. The bank also publishes quarterly inflation forecasts next week, expected to be revised higher. After Oct 28, the year's final decision comes on December 9.
Sources
Reuters, Oct 23 (via Kitco, WNCY). Note: this article reports economists' survey expectations; the Bank of Canada has not announced any decision.
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