'Not transitory at all': Scotia economist sees 8 BoC rate hikes
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Canada’s annual inflation rate came in hot once again in September, and Scotiabank economist Derek Holt sees the Bank of Canada responding with a series of rate hikes beginning next year.
Canada’s annual inflation rate came in hot once again in September, and Scotiabank economist Derek Holt sees the Bank of Canada responding with a series of rate hikes beginning next year.
“This isn’t transitory at all in my opinion,” said Holt, head of capital markets economics at Scotiabank, in an interview. “When it’s your home and your grocery bill and your car among the leading categories in terms of year-over-year contributions to this inflation picture, it suggests it’s broadly based.”
“It’s not just a story about the re-emergence out of lockdown and into a reopening economy, this is something that’s a little more disturbing than that.”
His comments come on the heels of Statistics Canada revealing an annual rate of inflation of 4.4 per cent for September, the fastest rate since 2003, marking back-to-back months consumer prices have doubled the Bank of Canada’s two per cent target.
Holt doesn’t see it ending there, predicting inflation readings approaching five per cent by the end of the year, which would be the biggest overshoot to the central bank’s target since 1991.
Holt said he expects the bank will “fight” some expectation in the market that rate hikes could be in the offing as early as the spring, but that the benchmark interest rate will start to raise later next year.
