The Big 6 banks have raised their expectations for Bank of Canada rate hikes, with most expecting another 125 to 150 basis points in tightening by the end of the year.
RBC was the latest to revise its expectations, matching Scotiabank’s call that the Bank of Canada’s key lending rate will reach 2.50% this year. However, RBC sees the Bank’s rate hikes being fully front-loaded to 2022, meaning it expects no additional hikes in 2023. Scotiabank, meanwhile, has pencilled in another 100 bps worth of hikes next year, which would bring the overnight target rate to 3%.
An overnight rate of 2.50% would be right in the middle of the Bank of Canada’s updated neutral range of 2% to 3%. The last time the overnight target rate was above 2% was back in 2008 during the Global Financial Crisis.
“We find ourselves once again revising our central bank…
