The Bank of Canada will have eyed this week’s data releases and market moves with some trepidation. The further acceleration in core CPI inflation in April means the Bank is all but guaranteed to push ahead with another 50bp interest rate hike at its upcoming policy meeting, particularly with gasoline prices spiking even higher this month. But the reported slump in home sales (and prices) and the sell-off in global equity markets, are warnings that overly aggressive monetary tightening by the Bank of Canada (and other central banks) could backfire, plunging the global economy into recession.
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