‘We see the Bank of Canada on hold for next couple of year’: What the economists say about the rate decision
The Bank of Canada held interest rates steady and raised its second-quarter growth forecast as expected on Wednesday while highlighting the risks that trade wars posed to the global economy.
Here’s what the economists say:
Derek Holt, Scotiabank
The Bank of Canada “retained the neutral bias but (was) incrementally more dovish in terms of the whole package … it didn’t go as high on its Q2 GDP growth (forecast) as it might have at 2.3%.”
Sal Guatieri, BMO
“There was no clear signal of a move in interest rates in either direction. Canada is still somewhat optimistic that growth will pick up in Q2… though they’re still concerned about trade tensions, a slowing global economy.”
“The risks for policy are more even handed than for the Federal Reserve… The Bank of Canada still believes policy is still supporting expansion.”
“We still see Bank of Canada on hold for next couple of years. There’s probably a little greater chance of a rate cut if the Fed does see the need to cut rates more rapidly. We are anticipating a couple of rate cuts from the Fed. That could put upward pressure on the Canadian dollar the Bank of Canada might need to address by cutting rates.”
Andrew Kelvin, TD Securities
“A bit more cautious than I had expected. They are leaning a bit more heavily into the global pessimism angle, arguing that is going to constrain growth a bit more than expected going forward.”
“We still had the upgrade to 2019 but I think that was a pretty conservative upgrade given what we’ve seen in the data. So clearly the growing wave of negative sentiment around the globe is impacting the Bank of Canada’s view on the outlook. They remain very concerned with trade tensions and they are going to take a cautious approach going forward. We continue to look for the Bank of Canada to cut interest rates in January 2020.”
© Thomson Reuters 2019
