Analysts at Scotiabank offer their take on the Bank of Canada’s (BOC) monetary policy, predicting the policy rate to hit 2% by the end of 2022.

Key quotes

“Despite a clear, but temporary, negative impact of Omicron on economic activity, it is clear that inflationary pressures are larger than earlier assessed and require a more robust monetary policy response.”

“In Canada, we expect a 25bps move on January 26 followed by 150bps of additional tightening for the remainder of the year, for a total increase of 175bps this year.”

The policy rate should hit 2% by the end of 2022. Despite that path, the real policy rate would remain negative through the year.”