Inflation will likely be the single most crucial factor that will determine when the central bank would move its rates up, Porter said.

“If inflation doesn’t show signs of starting to moderate a little bit by the middle of spring here, I think that’s when we might start to be able to talk about the possibility of the Federal Reserve and the Bank of Canada having to go in bigger [hikes] than 25 basis points at a time,” Porter said.

“It would show that they’re deeply concerned about the inflation backdrop, and that they’ve fallen behind the curve – which I actually do think they’re already a little bit concerned about.”

BoC Governor Tiff Macklem said earlier this month that the central bank’s rate hikes will take into account the readiness of Canadian businesses to return to full swing, amid the economy’s steady recovery from the COVID-19 pandemic.

Macklem said that there is a strong argument for the central bank to hike rates soon so that inflation scales back to the central bank’s 2% target rate, considering that without BoC intervention, inflation will moderate to just 3% by the end of 2022.