Bank of Canada to begin rising rates in July 2022 – Wells Fargo

The outlook of analysts at Wells Fargo, for the Bank of Canada monetary policy, is mildly more hawkish than the consensus.  They expect an initial rate hike during the third quarter of 2022, compared to the consensus forecast which sees an initial rate increase in Q4-2022. They year-end 2023 target for the central bank's rate is 1.50%.

Key Quotes: 

“We expect the Bank of Canada's (BoC) steady progress towards less accommodative monetary policy to continue in the coming quarters. Our outlook is for the central bank to end its quantitative easing program by early 2022. The BoC is currently purchasing Canadian government bonds at a targeted pace of C$2B per week. We expect a further slowing in bond purchases to C$1B per week to be announced at the October 27 meeting, and for the BoC to announce an end to the quantitative easing program at the January 26 meeting next year.”

“We also expect the Bank of Canada to begin raising its policy interest rates in 2022, starting with an initial 25 bps rate increase to 0.50% at the July 2022 monetary policy meeting and another 25 bps rate increase during Q4-2022. Regarding the initial rate hike, we believe the risks are tilted towards an earlier rather than later increase. We also see multiple rate hikes in 2023, and anticipate a cumulative 75 bps of tightening during that year.”