Quantitative Easing

Bank of Canada to start rate hike July 2022 – Wells Fargo

Wells Fargo analysts’ outlook for the Bank of Canada’s monetary policy is slightly more hawkish than the consensus. They expect a first rate hike in the third quarter of 2022, compared to the consensus forecast which calls for a first rate hike in Q4-2022. Their target for the end of 2023 for the central bank rate is 1.50%.

Key quotes:

“We expect the Bank of Canada’s (BoC) steady advance towards less accommodative monetary policy to continue over the next few quarters. We expect the central bank to end its quantitative easing program by early 2022. The BoC is currently buying Canadian government bonds at a target rate of C $ 2B per week. We expect a further slowdown in bond purchases to C $ 1 billion per week will be announced at the October 27 meeting, and the BoC to announce the end of the quantitative easing program at the meeting. from January 26 of next year. “

“We also expect the Bank of Canada to begin raising its key interest rates in 2022, starting with an initial rate hike of 25 basis points to 0.50% at the monetary policy meeting of July 2022 and another 25 basis point rate hike in the fourth quarter of 2022. Regarding the initial rate hike, we believe the risks are tilted higher sooner rather than later. We also expect multiple rate hikes in 2023 and anticipate a cumulative tightening of 75 basis points during that year. “

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