Large back-to-back employment declines in August and September, alongside a tick up in the unemployment rate to 6.5%, mean it will take a big upside surprise in the September CPI release in a couple of weeks to bring the October meeting back into play in terms of a potential interest rate hike. The Bank of Canada’s decision on whether to hike in December or January will depend largely on how energy prices and inflation evolve in the meantime, but for now we continue to expect the Bank will wait until next year to begin to normalise the policy rate.
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