Bank of Canada to break sequence of lower rates

TORONTO: With fiscal spending booming and households awash with cash, investors are betting that the Bank of Canada’s (BoC) next tightening cycle, expected to begin in 2022, will result in interest rates climbing above the previous peak for the first time in decades.

In four major tightening cycles since the early 1990s, the BoC’s key interest rate has peaked at a level that was lower than the preceding endpoint. But that could change in the next cycle, as historic levels of government spending globally raise prospects of an economic recovery from the Covid-19 crisis that is more robust than previous recoveries.