Interest rate tightening cycle likely to be cut short
The Bank of Canada will raise interest rates again this year, most likely at the April policy meeting. In contrast to the consensus, we don’t see a series of further rate hikes beyond this. NAFTA’s potential demise cannot be ruled out. Meanwhile, the housing slowdown that began more than a year ago appears to be morphing into a full-blown correction. Accordingly, we still believe that any further hikes will ultimately prove ill-timed and have to be reversed before year-end.