Bank of Canada Governor Tiff Macklem attends an event at the Bank of Canada in Ottawa, Canada, October 7, 2021. REUTERS/Blair Gable

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BENGALURU, April 6 (Reuters) – The Bank of Canada will raise its overnight interest rate by 50 basis points at its next policy meeting on April 13, according to a majority of economists polled by Reuters, who also sharply raised their inflation forecasts for this period. year.

The central bank is expected to raise rates faster than expected in the coming months to control soaring inflation, caused in part by supply chain disruptions and war-fueled rising energy costs Russian-Ukrainian.

After raising rates by 25 basis points to 0.50% in March – the central bank’s first hike since October 2018 as the economy recovers strongly from the COVID-19 pandemic – it was expected to follow up with 50 points additional basics this month.

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A majority of economists, 18 out of 29, in the March 31 to April 6 poll now call for a 50 basis point hike this month, including the five largest banks in Canada – BMO, CIBC, RBC , TD and Scotia, as well as National Bank.

The big five banks are also expecting another half-point rate hike at the June meeting, although the broader poll predicts the pace of rate hikes will slow to quarter-over-quarter increases. points each month, bringing rates to 2.00% by the end of 2022.

Interest rate futures pricing shows that the overnight rate is even higher, at 2.75% at year-end.

The shift in expectations for a bigger move in April comes after BoC Deputy Governor Sharon Kozicki said late last month that the bank was ready to act “forcefully” with rate hikes. rate to bring inflation back to the bank’s target.

Reuters Poll – Bank of Canada Monetary Policy and Canadian Economy – April 2022

It also coincides with a shift in expectations for half-point moves from its larger neighbor, the US Federal Reserve. If carried out, April’s decision would be the Bank of Canada’s first 50 basis point hike since May 2000.

“Given they (the BoC) are already well behind the tightening curve and inflation is well above their 2% target, there is really no reason for them to wait. longer and they really should get policy rates back to neutral as quickly as they can,” said Benjamin Reitzes, Canadian rates and macro strategist at BMO Capital Markets.

According to the poll, the Bank of Canada is expected to raise rates to 2.25% by the second quarter of 2023, then pause until at least the end of 2023.

Canada’s inflation rate is expected to average 5.6% in the last quarter and 5.9% this quarter, before declining to 5.0% and 4.4% over the next two quarters, a sharp rise from the 4.5%, 4.1%, 3.2% and 2.5% expected three months ago. .

While inflation was expected to slow significantly next year, it is still expected to remain above the central bank’s target until at least 2024.

BoC Monetary Policy Outlook – April 2022

A regular Bank of Canada survey released on Monday showed that a record number of Canadian businesses were facing capacity pressures amid intense labor shortages and supply chain difficulties. Read more

The economy is expected to grow by 4.3% this quarter, seasonally adjusted and annualized, lower than the 6.0% expected in January. It was then expected that it would increase by 3.5% and 3.1% during the following quarters, against 4.7% and 3.5%.

(For other articles in Reuters’ long-term global economic outlook polls dossier: )

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Reporting and polling by Shrutee Sarkar; Editing by Ross Finley and David Holmes

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