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Hike in interest rates: How should the portfolio position?

“But, I will caution that I think there is a non-trivial risk that inflation is more stable than central banks believe. The Bank of Canada cannot allow inflation to remain elevated for years. Otherwise it will deepen, and then We will face a much more difficult problem than this.

“I think there is a risk that central banks could push the rate higher today than anyone imagined with the idea that we will risk a shallow recession to make sure and a deep recession to make sure To avoid the need to take force rates to the point where we have a deep recession,” he said. “So, I think people should not be complacent thinking that rates cannot be very high, Because they can, at least for the time being.”

The bank said consumer price index inflation (CPI) is currently at 5.1%, and it plans to use its monetary policy tools to bring inflation back to the 2% target and keep inflation expectations “well stable”. has created. But, it said the invasion of Ukraine was putting more pressure on energy and food prices, so “inflation is increasing the risk that long-term inflation expectations could turn upward”.

D’Costa was surprised that the bank had not announced a quantitative tightening, and “I think this is a sign for the uncertainty of the war. The comment was that they will address this in the future,” he said. So, I found the commentary a bit dull, but they have made it clear that they are concerned about inflation and it is being elevated.”

D’Costa said lowering bond yields would be difficult, so people shouldn’t be surprised to see them fall further in the next year. He added that short-term investments should be focused on short maturity type bond products for now, though credit also has a huge opportunity at present.

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