Don’t be surprised if the Bank of Canada raises interest rates next

opinion

At 2.25 per cent, the Bank of Canada’s policy rate is currently at the bottom end of its estimated range for the neutral rate.

Jeremy Kronick is vice-president and director of the Centre on Financial and Monetary Policy at the C.D. Howe Institute, where Steve Ambler, a professor of economics at Université du Québec à Montréal, is the David Dodge Chair in Monetary Policy.

On Wednesday, the Bank of Canada held its policy interest rate (the overnight rate target) at 2.25 per cent, in a move widely anticipated by financial markets. While the last year has often seen the debate centre on whether the bank should cut or not, next year could see as much discussion of a rate hike as a rate cut.

When the bank reduced its policy rate at its last announcement in October , despite the d