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- Goldman Sachs forecasts more rate hikes from the Bank of Canada (BoC) this year due to rising inflation. Their analysis hinges on recent inflation reports revealing a steady rise in core goods prices and an unexpected surge in shelter prices. Markets are pricing in about 34bps of hikes by October, but Goldman Sachs argues that multiple hikes, or those surpassing 25bps, are plausible if inflation concerns persist.
- Despite this, Goldman Sachs does not predict a hike at the BoC’s June meeting, citing the bank’s emphasis on accumulating evidence. If risks persist, they foresee the market elevating front-end yields in the US and Canada, bolstering some CAD outperformance on crosses
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The next BoC meeting is Wednesday, June 7.
The rate hike cycle so far: