Economists at the Bank of America Global Research expect the Bank of Canada (BoC) to hike 75 basis points (bps). However, the USD/CAD pair is set to extend its race higher.

CAD yields to decline heading into year-end

“We expect the BoC to hike the policy rate by 75 bps to 3.25% to put it above the neutral range. Risks are balanced. Once the policy rate is in tightening territory the BoC will likely resume a gradual pace en route to 4.0% to tame inflation.” 

“We expect CAD yields to decline heading into year-end. Our base view is for the USD/CAD uptrend to continue in September.”

See – BoC Preview: Forecasts from eight major banks, hiking rates again