In line with market consensus, analysts at Wells Fargo, expect the Bank of Canada to raise the key interest rate by 25 basis point from 1.50% to 1.75% on Wednesday.
“The BoC has already raised rates a cumulative 100 bps since mid-2017, and an additional rate (…) would be consistent with an economy that continues to grow quicker than its potential rate of growth. While recent inflation figures were weaker than expected, core inflation remains solid in Canada and is right around the BoC’s 2% target, suggesting further rate hikes are likely ahead.”
“Another sign the BoC will push ahead with additional rate increases in the coming quarters is the resolution of NAFTA uncertainty now that the USMCA has been agreed to by the United States, Mexico and Canada. BoC policymakers had noted that NAFTA uncertainty was a reason to be more cautious in their approach to policy, and the removal of that uncertainty should allow the central bank to return focus to constructive Canadian fundamentals.”