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Weekly Commentary

Inflation Hits 30-Year High in Canada

January 21, 2022

When the Bank of Canada (BoC) ended its quantitative easing program in October, it laid out what’s in store for interest rates. Noting that the economy still required considerable accommodation and that liftoff wouldn’t happen while there was still slack in the economy, the BoC guessed that it would be appropriate to begin the process anywhere between April and october. Just three months later, markets and many forecasters are saying the mid-point of that window is six months too late, and that the BoC should move next week. While a January hike is an appreciable risk, we like to think that the BoC will use next week’s meeting to tee up a March start to its rate hike campaign.

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