Bank to Hike Interest Rates Three Times in 2022: Canada’s Two-Year Financial Markets Outlook

The Conference Board of Canada, 13 pages, February 8, 2022
Issue briefing
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This quarterly economic forecast presents the medium-term outlook for the Canadian economy. This release focuses on financial markets. For an overview of all major components of the economy, go to the Canadian Outlook main page.

Document Highlights

  • The Bank of Canada will increase interest rates three times in 2022 to contain inflation, which has recently been increasing at a pace close to 5.0 per cent.
  • Policy-makers view the ongoing surge in inflation as transitory, but the rise in consumer prices is turning out to be more persistent than originally thought. If increases in consumer prices prove to be more long-lasting and begin impacting wages, the Bank may increase interest rates more than the three hikes assumed in our base-case view.
  • The loonie will trade in the US$0.76–US$0.78 range over the near term, as ongoing Fed tightening will hold the loonie back from appreciating above the US$0.80 mark.
  • The European Central Bank will remain more cautious than the Federal Reserve, Bank of England, and Bank of Canada because, even though inflation has increased, economic growth and gains in employment remain below expectations.
  • Rising inflation led the Bank of England to increase its key interest rate in late December, the first major central bank to do so.

Table of Contents

Key findings
Financial Markets Snapshot
Monetary Policy in Canada
International Highlights

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