Economy operating at capacity behind Bank of Canada rate hike


J.P. Gervais on the economic trends and future BOC decisions he sees in relation to the October 24 interest rate hike.

Highlights:

  • Expectations around inflationary pressures are a key driver
  • While inflation figures recently flirted with 3%, the BoC projects pressures will ease early 2019
  • BOC Business Outlook Survey suggests wage growth will rise over the next few months because of a strong labour market
  • New USMCA should boost business confidence although lower commodity prices will be a drag on exports and investment