Skip to Main Content
  • CIBC.com
  • CIBC Private Wealth
  • CIBC Websites
Client Login
  • Welcome
  • Working with You
  • Meet the Team
  • What We Do
  • Community
  • What's New
  • Say Hello
  • CIBC.com
  • CIBC Private Wealth
  • CIBC Websites
  • Client Login
 CIBC Private Wealth, Wood Gundy  CIBC Private Wealth, Wood Gundy

TRAINOR SPOONER Advisory Group

  • Welcome
  • Working with You
  • Meet the Team
  • What We Do
  • Community
  • What's New
  • Say Hello

What's New

Address 635 Fitzgerald Avenue Suite 101 Courtenay BC, V9N 2R4
Telephone Number (250) 703-5386
Email Email us
Email Email
Telephone Number Tel

CIBC Private Wealth

June 07, 2023

Facebook
LinkedIn
Twitter
Mother, father and child in the grocery store.

BoC continues quantitative tightening with another interest rate increase

 

The Bank of Canada (BoC) raised the overnight rate by 25 basis points (bps) to 4.75% today as it continues quantitative tightening.
 

The decision to raise interest rates again is an effort to help bring supply and demand back into balance and return inflation to the target rate of 2%. The BoC stated that monetary policy was not sufficiently restrictive and quantitative tightening complements a restrictive monetary policy as it can help normalize the BoC’s balance sheet—and in turn the rate of inflation. Although the BoC notes inflation is coming down globally when compared to a year ago (largely due to lower energy prices), underlying inflation remains high.
 

“The Bank of Canada’s decision to raise rates was a surprise to investors”, says Giuseppe Pietrantonio, Associate Client Portfolio Manager, Multi-Asset and Currency Management at CIBC Asset Management. “But the re-acceleration of inflation and economic growth have forced the BoC to continue raising rates.”
 

Although surprising, CIBC Capital Markets confirms the interest rate increase is justified because of the recent readings on core inflation, the tightness in the labour market, and persistent excess demand. The unexpected strength in consumption growth and interest-sensitive areas of the economy are also key factors. They go on to note that should inflation get stuck above the 2% target, additional rate hikes could continue if signs of economic slack opening up aren't clear in forthcoming data.
 

Interest-sensitive financial markets have moved sharply, as seen in the increase in Canadian bond yields and the appreciation of the CAD versus the USD. Further market movements will be largely determined by the extent and length of this tightening cycle. If the BoC continues to raise rates or decides to keep rates elevated for an extended period of time, equity markets are expected to face challenges in the short term.
 

When deciding if additional interest rate hikes are required to help lower inflation, the BoC will continue to evaluate whether the evolution of excess demand, wage growth and corporate pricing behaviours are consistent with achieving the target inflation rate. The Bank remains committed to restoring price stability for Canadians.
 

At CIBC Private Wealth, we take a comprehensive approach to managing, building and protecting your wealth. If you'd like to discuss this market and economic update in more detail or have questions about your investments, please get in touch with me any time.

Related posts

CIBC Private Wealth

December 06, 2023

Canadian flag in front of blue sky

Rates hold steady as the BoC focuses on quantitative tightening

The Bank of Canada (BoC) held the overnight rate at 5% today as it continues its policy of quantitative tightening.

Read more

CIBC Private Wealth

December 06, 2023

Man at table with tablet.

Morning Market Brief

Slower activity in major economies could weigh on global growth in 2024

Read more
 
 
  • Rates
  • FAQ
  • Agreements
  • Trademarks & Disclaimers
  • Privacy & Security
  • IIROC AdvisorReport
  • Accessibility at CIBC
 IIROC  Canadian Investor Protection Fund

CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries: CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (“CAM”); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. (“WMI”). CIBC Private Banking provides solutions from CIBC Investor Services Inc.(“ISI”), CAM and credit products. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc.


CIBC Private Wealth services are available to qualified individuals. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license.