![\"BMO](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2022\/03\/bank-of-canada-bmo.jpg\")
<\/a>Photo: James Bombales<\/a><\/em><\/p>\nThe Bank of Canada is scheduled to make its next rate announcement in a couple of weeks, and one bank is predicting that this will be the start of two back-to-back 50 basis point (bp) hikes to the overnight rate.<\/p>\n
In a recent Bank of Montreal (BMO) Economics EconoFACTS report<\/a>, deputy chief economist Michael Gregory and Benjamin Reitzes, managing director of Canadian rates and a macro strategist for fixed income strategy, published updated predictions on policy rates for the Bank of Canada and the Federal Reserve. A \u201csharply hawkish turn in rhetoric,\u201d from both federal banks in response to rising prices prompted the economists to revise their outlooks.<\/p>\n Now, BMO is forecasting that there will be a 50 bp rate hike at each of the next two BoC policy announcements, which are scheduled for April 13th and June 1st. This would be followed by a 25 bp increase in July.<\/p>\n\n \u201cThat would put rates at 1.75 per cent, the lower end of the BoC\u2019s 1.75 per cent-to-2.75 per cent neutral range and the peak of the last cycle,\u201d said the report. \u201cIn addition, quantitative tightening (QT) looks to start at the April meeting.\u201d<\/p>\n The overnight rate is currently 0.5 per cent, and was increased from 0.25 per cent during the BoC\u2019s March 2nd rate announcement<\/a>. In a previous EconoFACTS report<\/a>, Reitzes forecasted that the BoC would make a 25 bp rate hike during the next scheduled meeting in April.<\/p>\n As inflation soars well above the BoC\u2019s two per cent target\u00a0\u2014 the consumer price index rose 5.7 per cent annually in February\u00a0\u2014 policymakers have \u201cflagged a more hawkish path for interest rates.\u201d<\/p>\n At the Federal Reserve Bank of San Francisco Macroeconomics and Monetary Policy Conference last week, the BoC\u2019s deputy governor, Sharon Kozicki, said that the BoC is \u201cprepared to act forcefully,\u201d to return inflation to target. In the same speech, Kozicki also said that the \u201cpace and magnitude of interest rate increases and the start of QT to be active parts of our deliberations at our next decision in April.\u201d<\/p>\n Words like \u201cforcefully\u201d and \u201cmagnitude\u201d, in addition to the change in tone, are the reasons Gregory and Reitzes say they have changed their BoC rate call.<\/p>\n