Breaking News
Investing Pro 0
⏰ React to the Market Faster with Custom, Real-Time News Get Started

Reuters poll: BoC to keep up pace with 50 basis point December rate hike -economists

Economy Dec 01, 2022 09:52AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Bank of Canada Governor Tiff Macklem walks outside the Bank of Canada building in Ottawa, Ontario, Canada June 22, 2020. REUTERS/Blair Gable/File Photo
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio

By Indradip Ghosh

BENGALURU (Reuters) - The Bank of Canada will hike its key interest rate by another 50 basis points to 4.25% on Dec. 7, according to a slim majority of economists in a Reuters poll that suggests the central bank will then hit pause on a nine-month tightening campaign.

An economy that grew at a solid annualized 2.9% rate in the third quarter is increasingly at risk from a falling property market and one of the highest household debt-to-income ratios in the world, with the full effect of rate rises yet to be felt.

Inflation, at 6.9% in October, is still running over three times the central bank's 2% target.

That has left economists and markets at odds over whether the BoC, which has raised rates by 350 basis points since March, will opt for another half-point move and aim to wind up an aggressive campaign before an expected recession sets in.

Just over half, 16 of 30, of the economists polled over the last few days expected a half-point rise on Dec. 7 to 4.25%, matching a move in October and in line with current expectations for the U.S. Federal Reserve's December meeting.

Fourteen said the BoC would dial down its pace to 25 basis points. Markets are pricing in an over 80% chance of 25, which would be a third straight reduction in rate hike size by policymakers from a peak of 100 in July.

"The rise in inventory ratios and weakness in domestic demand should be a signpost of weaker domestically-driven inflationary pressures in the future," said Andrew Grantham, senior economist at CIBC.

"As such, we continue to expect a final 50bp rate hike to a peak of 4.25%, before the Bank moves to the sidelines in 2023 to observe how the economy is coping with these higher interest rates."

Of the large Canadian banks, Scotiabank, CIBC and National Bank expected a 50 basis point move with no further hikes afterward. RBC forecasts a 25 basis point hike and then a pause, while BMO expects 50 and then another 25 in early 2023.

Meanwhile personal spending and investment in housing declined last quarter, while a separate Reuters survey showed house prices would tumble a median 17.5% from their peak, roughly double the fall during the 2008-09 financial crisis.

Although there was no clear consensus on when the overnight rate would peak, around 90% of respondents, or 26 of 29, predicted a terminal rate of 4.25% or higher, suggesting the BoC may be done in December and if not, soon afterward.

The Fed, by contrast, is expected to raise its federal funds rate to a minimum of 4.75%-5.00% early next year, with the risks around forecasts skewed toward a higher rate.

With inflation expected to stay above the BoC's target for the coming year, 10 of 13 economists who answered an additional question said the bigger risk was also that rates reach a higher peak, and later than they currently expect.

BoC Governor Tiff Macklem made clear at the October meeting the end of the rate hiking campaign was near.

"We are getting closer, but we are not there yet," he told reporters at a news conference.

BoC Senior Deputy Governor Carolyn Rogers (NYSE:ROG) recently said higher interest rates were starting to slow the economy and high household mortgage debt had remained a major area of concern.

Seven of 12 respondents to an additional question said the BoC's level of concern was about right.

"The latest BoC research on household vulnerability and flexible mortgage rates support the idea that the BoC terminal rate will end at least 50 basis points below the U.S. Federal Reserve," said Sebastien Lavoie, economist at Laurentian Bank.

(For other stories from the Reuters global economic poll)

Reuters poll: BoC to keep up pace with 50 basis point December rate hike -economists

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email