The George Davis Report: June 2023 Edition

Don’t miss this month’s edition of the George Davis Report, where George discusses the recent BoC rate hike and changes to RBC’s interest rate and FX forecasts.

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What you need to know:

1. The BoC has been forced off the sidelines after pausing at the prior two interest rate meetings, with the recent hike pushing the overnight rate to a new 22-year high of 4.75%.

2. More persistent excess demand runs the risk of keeping inflation materially above the BoC’s 2% target, thereby forcing them to act.

3.The hawkish tilt suggests that a one-off rate hike will not do the job and indicates that additional hikes are on the horizon.

4. Even if rates reach the 5% threshold, risks will remain tilted to the topside until growth, job and inflation data confirm a broader slowdown.

5. We discuss our recently revised interest rate and USD/CAD forecasts in light of the more proactive action taken by the BoC.

 

 

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