Bank of America / Merrill Lynch outlook for the Bank of Canada for the rest of 2018
We expect the Bank of Canada (BoC) to continue hiking to bring the overnight rate target to 2% by year-end 2018
BoC will respond to the sugar rush from US fiscal candy, that is, to stronger growth and higher inflation in Canada but also to a US Fed that seems on its way to hiking faster
With core inflation at the target
- the Fed hiking
- and a tight labor market
we continue to believe that the BoC will hike three more times this year. We expect it to hike again
- in April, July and October
- The timing is not set in stone, and the hikes may well happen in May, October and December
The pace will in part be determined by CAD dynamics
