Bank of Canada: Higher oil prices support a rate hike – NBC
National Bank of Canada (NBC) economists Taylor Schleich and Ethan Currie argue that economic slack and contained core inflation have allowed the Bank of Canada to be patient, but sustained high Oil prices and a firmer growth backdrop now point to a rate hike.
National Bank of Canada economists Taylor Schleich and Ethan Currie believe the Bank of Canada is now ready to raise interest rates after analyzing economic slack and contained core inflation. They anticipate a first increase since July 2023, with a December odds near 50%. While trade uncertainty may weigh on growth outlooks, the BoC has downplayed this risk.
The positive economic benefits of higher oil prices are being highlighted by Governor Macklem, who expects a trade deal to alleviate concerns. If the Bank of Canada tightens policy, the next move will likely be in December, depending on upgraded inflation and growth projections in a new Monetary Policy Report and the Bank's typical cycle of back-to-back hikes.
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