Bank of Canada To Wind Down Stimulus Measures, Begin To Raise Interest Rates In 2022

• Fitch Solutions, expects the Bank of Canada (BoC) will leave the benchmark interest rate unchanged, at 0.25%, through end-2021 but hike by 25 basis points (bps), to 0.50%, in 2022, an upward revision from their previous forecast of 0.25%. 
• Persistent inflationary pressures and higher inflation expectations amid an economic recovery underpin the hawkish view for the BoC, particularly as many other central banks have begun to raise interest rates in H221. 
• Elevated commodity prices and global supply shortages underpin Fitch’s 3.8% inflation forecast for 2021. However, it is expected that price growth will decelerate throughout 2022 and end the year at 2.3%.

(Source: Fitch Solutions)