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Analysts from Wells Fargo,  expect the Bank of Canada to continue with its own tightening campaign by increasing its target rate 25 bps, to 1.25% on Wednesday. 

Key Quotes: 

“North America came out of the gates early in this latest global tightening cycle with the U.S. Federal Reserve, the Bank of Canada and the Bank of Mexico leading the way in terms of higher interest rates. While one of the reasons has to do with the geographic proximity to the United States of both Canada and Mexico, other reasons are fundamentally domestic.”

“In this sense, we expect the Bank of Canada to continue with its own tightening campaign by increasing its target rate 25 bps, to 1.25 percent on Wednesday. The recent employment report and the uptick in CPI inflation lifted the odds of an increase. This follows a 25 bps increase in July and another one in September of last year.”

“Going forward, we expect the Bank of Canada to continue to follow the events south of the border and decide on further moves according to its policy needs.”