Burleton: Markets Misreading Rate Hike Signals

TD Bank Group's deputy chief economist, Derek Burleton, is not convinced that markets are correctly pricing in rate hikes from the Bank of Canada. Speaking at MortgageFest Canada on September 23, he stated that his baseline forecast calls for no rate increases, despite bond markets anticipating four or more hikes.

Burleton argued that the Canadian economy and US Federal Reserve's economy are in different places, with US core inflation above 3% and Canada's close to its 2% target. He noted that higher oil prices will worsen Canadian inflation, but not dramatically, and that the country still has excess slack in its job market.

He estimated a 50% chance of no rate hikes from the Bank of Canada, with a secondary scenario anticipating one or two hikes at most.