HEWC - Bank of Canada: Hike More Now Less Later

• Above-target inflation, higher commodity prices, and concerns about financial stability prompted the Bank of Canada (BOC) to hasten its rate-hiking cycle.
• Buoyed by strong commodity prices, above-trend growth and inflation, a closed output gap, and an expected lag before higher rates affect consumers, BOC officials likely believe the economy can weather a faster hiking cycle.
• We expect sharply higher interest rates, along with a combination of supply-side reforms focused on affordable housing (amid waning affordability), will help cool the Canadian housing market.

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