The possibility of a full-percentage point interest rate hike from the Bank of Canada at its July meeting is now firmly on the table following the latest inflation data for May, according to strategists at JPMorgan.

“The pace of inflation is clearly not letting up, and the [Bank of Canada] must demonstrate its resolve and move more aggressively, in our view, to tame inflationary pressures,” the strategists said in a report on Wednesday titled “Canada CPI: Get out the oven mitts.”

“We now see material risk that the bank will announce a 100 [basis point] increase in July.”

Statistics Canada reported Wednesday that consumer prices rose at the fastest pace in almost four decades at 7.7 per cent annualized in May. The price increases were broad-based, with gasoline leading the way. The May headline number was an acceleration from the 6.8 per cent increase StatsCan reported for April.

“The inflation surge looks likely to persist in June as gasoline prices have climbed even higher this month,” the report said.

JPMorgan’s base case expectation is for the Canadian central bank to raise its overnight rate by three-quarters of a point in July to 2.25 per cent.

The surging cost of living has shaken confidence among investors over whether the Bank of Canada will be able to bring inflation down to its two per cent target in a timely manner.

However, a prominent Bay Street economist said a full-percentage point hike might not send the best signal to the market.

“I think that if you go 100 basis points, you will reflect weakness. You show that you're actually not under control,” Benjamin Tal, deputy chief economist at CIBC Capital Markets, said in an interview Wednesday.

He added that a full-point hike could indicate that the central bank is “panicking” about inflation.

Tal said his prediction is for a three-quarter point increase since the market is already pricing that in and it’s of the same magnitude as the most recent U.S. Federal Reserve hike.