Markets and economists alike overwhelmingly expect the Bank of Canada to lift its policy rate by 75 basis points when it meets this Wednesday.
That would take the Bank’s target overnight rate to 2.25%, and implies a prime rate (upon which variable-rate mortgages are priced) of 4.45%. The last time Canadians saw a prime rate above 4% was back in 2008.
Experts agree that with inflation still stubbornly at 7.7%, the Bank of Canada will be forced to move aggressively at its upcoming meetings to break consumer expectations of lingering high inflation.
“Unless the BoC breaks inflation psychology with convincing hikes this month and in September—and/or oil prices dive—CPI’s return to 2% could take more than two years,” rate expect Rob McLister of MortgageLogic.news wrote in a recent client note. “Past inflation spikes make that…