The Bank of Canada is likely to wait for the U.S. Federal Reserve to be the first central bank to hike interest rates before doing so itself, according to one Bay Street economist. 

"The timetable for the Fed to move is getting shorter and shorter. And, again, I will not be surprised if we will see the first move in the last quarter in 2022," said Benjamin Tal, deputy chief economist at CIBC World Markets Inc., in a television interview. "The Bank of Canada is not even dreaming, I believe, of moving before the Fed."

Tal added part of the strategy could see the Bank of Canada raise rates after the Federal Reserve to give some time for the Canadian dollar to depreciate against the greenback.

Tal said timing is everything when it comes to raising rates, suggesting that central banks should strike a balance between moving too quickly and waiting for too long to make any changes. 

"If you don’t move quickly enough and all of a sudden, inflation takes off and the market believes you are behind the curve, that can have a significant impact on the long end of the curve," he said. 

Tal noted the 10-year U.S. Treasury yield rose above 1.3 per cent earlier this week, which was the first time in nearly a year. 

"Moving late and allowing inflation to take over, if it’s actually happening, can be very, very significantly damaging to the stock market," he said.

Since inflation is a lagging indicator, Tal said it would be challenging to pinpoint the precise impact central bank policy has on rising inflation.

"It’s like this is a brown spot on a banana: when you see it, it’s too late. And that’s exactly what we are going to see with inflation," Tal said.