Saturday, August 20, 2022
HomeWealth ManagementRate-cut bets ease amid expectations of slow return to inflation target

Rate-cut bets ease amid expectations of slow return to inflation target


“The biggest theme from this latest (inflation) reading is a significant rotation in where the most intense price pressures are coming from,” Doug Porter, chief economist at BMO Capital Markets, said.

“The Bank can scarcely back down anytime soon, as it has a long-term battle on its hands reining in 5% core inflation,” he added.

Money markets currently predict that the central bank’s benchmark interest rate will peak at roughly 3.75% in the first quarter of next year and stay close to that level through much of 2023, showing that investors appear to have taken notice.

The Federal Reserve might likewise have to fight hard to get inflation back on track. But its mandate requires it to look at both employment and price stability, as opposed to Canada’s central bank’s single objective of low inflation.

“The BoC is most likely biased towards taking the risk of overtightening rather than undertightening until they see enough evidence that demand is cooling,” said Jimmy Jean, chief economist at Desjardins Group.

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -
Google search engine

Most Popular

Recent Comments