Strategists at JPMorgan are seeing a full percentage point interest hike from the Bank of Canada at its July meeting following the record-breaking inflation data for the month of May.
Canada’s consumer price index rose 7.7%, significantly higher than the consensus estimate of 7.4% and almost a full point over April’s reading of 6.8%. It also went well beyond Bank of Canada’s spring forecast of a 5.8% average this quarter.
According to the JPMorgan strategists in a report called “Canada CPI: Get Out The Oven Mitts,” data shows that the inflation is likely to continue with a further 6% surge as gasoline prices in June.
“We now see material risk that the bank will announce a 100 [basis point] increase in July,” according to the report.
As the inflation continues to rise, with a peak that’s still seemingly elusive, the strategists believe that the Bank of Canada must “move more aggressively,” the report said, “to tame inflationary pressures.”
JPMorgan strategists expect the Canadian central bank to raise its overnight rate to 2.25% in July, or by an additional .75%.
Capital Economics’ Stephen Brown sees inflation going up 8.3% in June. And while he expects the price growth to slow down in July if oil prices decline, he sees inflation for the year of 2022 to be over the 7% mark.
“The big picture remains that underlying inflationary pressures were far stronger than most anticipated,” according to Brown.
Information for this briefing was found via Financial Post and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
2 Responses
Assumptions are not news. Please stop scaring public and start publishing real news.
Forecasts are news worth publishing.
Or are you stating that a upcoming heat wave or snowstorm from a weather channel do not qualify as news worth publishing? Keep in mind that weather reports are not always 100% correct. What about when the US stated that a Russia attack on Ukrainian was imminent back in January? Is that also not news worth publishing because it hasn’t happened and it scares the public? President Zelenskyy for sure did not like this news and he even down played the possibility of the attack as US was pulling out diplomats because he didn’t want the economy to be effected due to panic (https://www.politico.com/newsletters/national-security-daily/2022/01/28/why-imminent-pisses-zelensky-off-00003339). Imagine the number of civilian lives that could have been spared if the civilians were provided with the “assumption” news and had the opportunity to decide for themselves whether to evacuate in advance.
News about what’s to come should always be published as long as there are sufficient facts backing up the forecast. Now, if people have any concerns regarding the arguments that this article used to come to its conclusion, feel free to share them; but, silencing all pessimistic news about what might happen just because it might cause a panic, will do more harm than good.