RE:RE:RE:RE:REITs smell BoC Rate Hike There is a dual mandate when it comes to the policy rate. They are to 1) bring down inflation and 2) stabilize the labour market. History teaches us that in order to bring down inflation you have to cause a recession. It's almost inevitable and every hiking cycle caused a recession with the exception of 1966,1984 and 1995. If rates stay the same there is a similar risk as to what happened in the early 1980's when Paul Volcker had to push the gas pedal because he eased off too early. If inflation expectations become unhinged, what happens is that people expect higher prices and they spend more because they still have their jobs. It becomes a classic wage/price spiral that never ends.
The point is that you can't ease off on policy rates because Canada cannot handle it. The whole point is to raise rates until it has an effect on the labour market which will help drive inflation lower. Otherwise, inflations stays elevated for longer.