What's missing from the Bank of Canada's statement: Economists weigh in
“In fact, Governor Macklem said market pricing for cuts later this year “doesn’t look today like the most likely scenario to us.” To be clear,
our base case is for the BoC to remain on hold throughout 2023, and we think its next move is more likely to be a cut than a hike . But if economic activity doesn’t slow in the coming quarters as we and the BoC expect — moving the economy from excess demand currently to excess supply later this year —“The Bank of Canada delivered mixed messages today, noting that it is more confident that inflation will decline in the next few months but less confident that inflation will return to two per cent as quickly as it previously anticipated.
“This suggests the BoC could hike later this year if underlying inflationary pressures prove stickier or if growth continues to be more resilient than expected. However, the recent banking turmoil in the U.S. and Europe is likely leading to some caution.However, the risks remain tilted towards another hike if inflation proves sticky and the labour market remains tight, leading to elevated wage growth.
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