“But, hopefully it will bring down the inflation to 4% range and increase the spending power of the people as it is much higher than the interest rate. I think it is important that we don’t let inflation run the way it is. Or it becomes more long-term, which is very harmful to the country and the economy. So, of course, seeing the tightening of monetary policy in Canada is a very welcome start.”
While some have predicted that the bank may hike six rates – for a total of 1.75% – this year, Little expects a smaller hike that could climb up to a maximum of 1.5% for the year.
“It will have a huge impact on the national debt of the government,” he said. “So, I don’t think they can let the interest rate go to such an extent that it has a negative impact on the economy.”
Little has been said that the bank will monitor the impact of the interest rate hike on inflation and if it is not higher, it may accelerate during the year. But he added that, although the first quarter is expected to be sluggish and we could see 4% growth this year, “they don’t want to risk it, so they have to walk a good tightrope here”.
Carte Wealth Management Inc. in Toronto. Financial adviser Francine Dick agreed. She said the bank could start testing the waters with an increase of 25 basis points “and, if the world doesn’t collapse, it could start increasing it a bit” – although it also doesn’t expect a six rate hike. , or an increase of 1.75% for one year.
