Scotiabank Head of Capital Markets Economics Derek Holt said there’s a “solid case” for the Bank of Canada (BoC) to unleash a Goliath-sized rate hike ranging from three-quarters of a point to a full percentage point as the central bank grapples with inflation at the highest level since 1991.

In a report to clients Wednesday afternoon, Holt said that while Scotia’s official call is for a second-straight half-point increase in June, consumer prices rising at a 6.7 per cent pace through March could bolster the case for faster and larger hikes.

“The fact that inflation is running amok should drive a minimum 50 basis point (bps) hike that we forecast at the next meeting in June. I had previously argued they should deliver a series of three 50bps moves,” he said. “There is even a solid case for the BoC to hike by 75–100bps in one shot.” (Each basis equals one-one hundredth of a percentage point).

Holt said that achieving the bank’s goal of getting nominal rates back to neutral — essentially the level where the central bank is neither stoking economic activity nor holding it back — should be paramount, and in fact indicated he believes the Bank of Canada has thus far moved too slowly.

“Monetary policy tailored to current conditions should already be at neutral — if not above — given where inflation is and with a full employment recovery as the economy has moved into excess aggregate demand” he said.

“Having failed to deliver that outcome, the second best option would be to get to the mid-point of the two to three per cent neutral rate range this summer and preferably by July in my view.”

The Bank of Canada raised its estimate of the neutral rate to 2.5 per cent at its most recent meeting, a quarter percentage point higher than the previous target.

In an email to BNN Bloomberg, Holt said Scotia was sticking to its call that the Bank of Canada’s benchmark rate will top out at three per cent this tightening cycle, but said soaring inflation could accelerate the timing of some of those hikes, rather than change the endpoint. The central bank’s main policy rate is currently one per cent.

While inflation hit its highest level since January 1991 last month, Scotiabank expects consumer price pressures may intensify in April — estimating inflation could top eight per cent in the month.

That view is in part due to a change in methodology that will add used vehicle prices to the index, sending that inflation rate to levels last seen in the early 1980s.