Bank of Canada will be meeting this week for the monthly monetary policy. According to the economists polled, the broader consensus is for the hawkish case for the Bank of Canada to hike interest rates this week.

The hawkish view comes just after in December, the BoC held rates steady and gave a dovish forward guidance.

However, latest economic data has revealed a strong resurgence in economic activity.

Canada’s Job Report shows positive

Most importantly, Canada’s labor market has strengthened significantly in December.

The unemployment rate was seen falling to a 40-year low at 5.7% beating expectations.

The number of jobs added during the month also grew significantly with the data supporting the view that significant slack in the economy had diminished.

As a result, the BoC is expected to hike rates to prevent the economy from overheating.

BoC’s Business Outlook Survey

Other reports released between the two central bank meetings included the BoC’s business outlook survey.

The survey showed that businesses were very optimistic and noted difficulty in hiring workers.

The increased activity in the labor market suggests that wages and inflation could start to rise.

However, despite the hawkish expectations, a lot will be left to be seen with the BoC likely to bide more time rather than rely on just one month’s economic reports.