The Bank of Canada’s new-found confidence in the economy and forecast rebound in core inflation have prompted speculation that interest rates might rise much higher this year. But with household debt at extremely high levels and the housing bubble already showing signs of bursting, we anticipate no more than one more interest rate hike. And if our fears about a housing downturn materialise later this year, then the Bank would have to admit that it was wrong to raise rates and lower them early next year.
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