Scotiabank chief economist says another BoC rate hike is 'required,' but not everyone agrees
CTV
Economists are offering differing opinions on whether the Bank of Canada should raise interest rates again after a slight uptick to the annual pace of inflation last month.
Economists are offering differing opinions on whether the Bank of Canada should raise interest rates again after a slight uptick to the annual pace of inflation last month.
On Thursday, Scotiabank's chief economist released his forecast, arguing that Canada's central bank "no longer has the luxury to wait to see how the balance of inflation risks evolves in coming months."
"As a result, we now think a 25 basis points move is required at the June meeting," Jean-François Perrault wrote in a research note to investors Thursday. "Governor (Tiff) Macklem should leave the door clearly open to additional moves should those be required. We continue to expect the policy rate will be cut early next year and see little chance of a cut this year.
"That being said, this move is best seen as insurance against inflation. Our model does not indicate a need for higher rates despite the April inflation shock and other developments."
The annual inflation rate rose in April for the first time since it peaked in June last year. The consumer price index rose to 4.4 per cent in April compared to a year ago, up from 4.3 per cent in March.
On top of that, the Canadian Real Estate Association reported that home sales in April jumped 11.3 per cent from the previous month, with the average home price up more than $100,000 compared to January.
Last month, the Bank of Canada announced it would hold its key interest rate at 4.5 per cent for now and said it expects the annual inflation rate to come down to about three per cent in the coming months.
