Canadians should brace for an interest rate boosts as the year wears on, so says a former Bank of Canada governor.
David Dodge said Tuesday he expects inflation will gradually come down from multi-decade highs and expects to see the central bank’s main policy rate rise by a full percentage point at minimum.
"I don't know (what the bank will do Wednesday), but what I do know is that over the next period, over the next year, those rates are probably going to go up at least 100 basis points."
As of Wednesday morning, Bloomberg data indicated investors see a 75-per-cent probability that the central bank will raise its main policy rate by a quarter point on Wednesday to 0.5%. That would be the first increase since 2018, and would happen after Statistics Canada’s most recent consumer price index showed inflation surged 4.8% year-over-year in December, which was the fastest rate since September1991.
Dodge said he expects the annualized inflation will "come down considerably" to around 2.5% or 2.75% by the end of this year.
