July 11, 2017 / 9:05 AM / in a month

HSBC expects Canada to hike rates in July and October, changes forecast

A pedestrian walks past the Bank of Canada building in Ottawa, Ontario, Canada, May 23, 2017.Chris Wattie

LONDON (Reuters) - HSBC said on Tuesday that it now forecasts the Bank of Canada to hike interest rates in July and October, having previously forecast the central bank to keep rates on hold until the final quarter of 2018.

Canada's central bank meets on Wednesday and is expected to deliver its first rate rise in nearly seven years and in recent weeks policymakers have been laying the groundwork for a hike.

In a note outlining changes to its current policy rates and forecasts, HSBC said that in Canada, "this is due to the much more hawkish tone struck by the central bank over recent weeks."

The Bank of Canada's key rate stands at 0.50 percent. HSBC expects it to rise to 0.75 percent in the third quarter and 1 percent in the fourth quarter.

Reporting by Dhara Ranasinghe, Editing by Abhinav Ramnarayan

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