30 June 2011

It’s interesting that only yesterday many analytics expected no rate hikes until spring 2012. And today they changed their minds to a closer date. According to the overnight index swap, the chances of a December rate hike are priced in 60% (on Monday it was only 30%).  Probably, some economists will also predict a fall rate move again.
Nevertheless, the CIBC economist Avery Shenfeld noted that the central bank needs to see the real sustained “demand” before starting another rate hike cycle. In his opinion, high inflation is not enough for that.