InvestorQ : Will the interest rate go up in Canada for the year 2021?
Nikita Damle made post

Will the interest rate go up in Canada for the year 2021?

Moii Chavate answered.
2 weeks ago
As the economy recovers from the worst of the COVID-19 pandemic, inflation is rising and more people are getting back to work. In this scenario, the Bank of Canada (BoC) signaled in April that it could start hiking interest rates in late 2022, as it sharply boosted its outlook for the Canadian economy and reduced the scope of its bond-buying program. It also tapered its bond purchases, becoming the first major central bank to cut back on pandemic-era money-printing stimulus programs.

There has been a notable uptick in inflation since the last rate decision. The Consumer Price Index rose 3.6 %in May, the fastest annual pace of inflation in nearly a decade, while the average of the three core inflation metrics favored by the bank moved above its 2% target.

Looking at these indicators and adding to the fact that the US Federal Reserve has seemingly advanced its timelines for unwinding its stimulus, it seems plausible that the monetary authority could hike rates in the second half of 2021. However, these are just presumptions based on information available at this point in time. It is impossible and foolish to predict BoC’s moves. At this point, we can make a calculated guess that a rate hike is coming in the near future.