Bank of Canada taking a big gamble on rate hikes

The Bank of Canada’s decision to raise interest rates for a second consecutive time is a clear sign that policymakers are supremely confident in the economy. Considering the strong pace of recent GDP growth, we can’t rule out another rate hike in October. But given the potential for a disorderly unwinding of housing-related imbalances, we still think that this rate hike cycle is a gamble that might have to be reversed before long.