Some Analysts Shift To Another 75bp Hike Next Week

Following the CPI report, BMO and CIBC now see another 75bp hike next week (Oct 26) whilst Desjardins and RBC stick with 50bp, albeit with the latter noting upside risks.

• BMO: Inflation eased by less than expected and underlying inflation remains extremely persistent and sticky at above 5%. Combined with the BOC's recent tough rhetoric, the recent CAD weakness, and the strong likelihood that the Fed hikes 75bps on Nov 2, we now see a 75bp hike next week with 25bps to 4.25% pencilled in for Dec.
• CIBC: Seasonally adjusted inflation ex food & energy picked up more than expected and is too high for comfort. We now see a 75bp hike next week (previously thought 50bp) and might see a last 25bp in Dec if growth numbers support it.
• Desjardins: Inflation persistence will continue to see markets split between pricing a 50/75bp hike next week. Desjardins still lean to 50bp before 25bp in Dec as the bank begins to see the effects of higher interest rates show up more clearly.
• RBC: Core measures still very high but some early signs that breadth may be narrowing (63% of basket >3% vs 77% in July). Continue to anticipate more rate hikes, including 50bp next week with risks tilted to the upside.