INTEREST RATE HIKING CYCLE FORECASTED

As early as next week, the Bank of Canada will start a campaign of tighter monetary policy that will test the country’s debt-laden consumers and reveal whether its robust economic recovery has staying power.

The country has one of the highest total debt burdens in the developed world, ranking slightly behind France and well ahead of the U.S. Even so, markets are betting that the Bank of Canada will be the most aggressive Group of Seven central bank in lifting rates.

Economists and traders see a string of hikes, likely starting at the Jan. 26 decision, until the policy rate is back at the pre-pandemic level of 1.75% in about a year. The Bank of Nova Scotia is forecasting it will climb as high as 2%.