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JPM: Now See One More Hike In October

CANADA
  • Following the BoC decision to hike its policy rate 25bp to 5% yesterday, JPMorgan note that the Bank essentially rehashed the concerns that prompted the 25bp hike in June: a stronger-than-expected economy and a resurgence in housing indicators.
  • The hawkish rhetoric and heightened upside risks to inflation suggest more tightening ahead.
  • They now expect the Bank to raise the policy rate one more time in 2023 in October, with September a skip to await confirmation of the need for more tightening.
  • The Bank sees more upside risk on inflation than JPM, who believe the Bank will lean into that risk on any upside surprise in core inflation or wage growth. A still-strong labor market and resilient consumer point to greater upside risks on inflation.

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