J.P.Morgan, Goldman raise Canada central bank terminal rate forecast to 5.25%

(Reuters) – J.P.Morgan and Goldman Sachs (NYSE:) said on Wednesday they now expect the Bank of Canada (BoC) to deliver one last 25-basis point rate hike in October and lifted their terminal rate forecast to 5.25%.

The revised forecast came after the BoC hiked its key overnight rate by a quarter of a percentage point on Wednesday to a 22-year high of 5% and said it could raise rates further due to the risk of inflation stalling above its 2% target.

Both Wall Street banks had earlier expected the BoC to end the cycle with a terminal rate of 5%.

Goldman Sachs, however, warned that the final rate hike “could be pulled forward to September if upcoming activity and inflation data surprise to the upside.”

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