Bank of Canada cash rate forecast to 2% by the end of 2022

In brief from a much longer report):

  • Despite a clear, but temporary, negative impact of Omicron on economic activity, it is clear that inflationary pressures are larger than earlier assessed and require a more robust monetary policy response.
  • In Canada, we expect a 25bps move on January 26 followed by 150bps of additional tightening for the remainder of the year, for a total increase of 175bps this year. The policy rate should hit 2% by the end of 2022. Despite that path, the real policy rate would remain negative through the year.

Despite the rate hikes Scotia expect inflation to remain “uncomfortably high through 2023”.

cad real rates  20 January 2022

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