Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  News  >  Interest Rates

News : Interest Rates

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 

Bank of Canada Set to Hold Steady Again on Rates

share with twitter share with LinkedIn share with facebook
share via e-mail
0
12/05/2017 | 03:31pm CEST
By Paul Vieira 

OTTAWA -- Bank of Canada watchers expect the central bank to hit the pause button again on Wednesday when it issues its latest rate-policy decision, although some analysts say stellar employment data might prompt the central bank to revisit whether its preference for caution remains appropriate.

Most economists anticipate the Bank of Canada to remain on hold until at least April, once it has a better grasp of new mortgage-financing rules that could weigh on housing, and the outcome of talks aimed at renegotiating a revised North American Free Trade Agreement. The central bank also wants to gauge how indebted households respond to quarter-point rate rises in July and September.

Economists from 10 primary dealers of Canadian government securities participated in a survey for The Wall Street Journal ahead of the Bank of Canada's rate decision Wednesday. All economists surveyed said they expected no change in the central bank's benchmark policy rate, which sits currently at 1.0%.

Six of the analysts said the central bank would be on hold until April, while three said a rate increase would come in January, arguing that economic indicators -- highlighted by employment -- show an economy at or above potential output. One economist said underlying weakness in the economy could keep the Bank of Canada on hold until the latter half of 2018.

After sizzling growth in the first half of this year, economic growth slowed significantly to a 1.7% annualized pace in the third quarter, due mostly to a decline in exports. Canadian output surged 4.3% in the second quarter.

Growth is expected to pick up steam again in the fourth quarter, but data covering the October-to-December period won't be available until March. Uncertainties posed by housing policy and Nafta talks also complicate the Bank of Canada's policy-making outlook.

For the Bank of Canada, "why not wait until the spring, when the picture will be clearer," said Avery Shenfeld, chief economist at CIBC World Markets.

For some economists, the November jobs report suggests there's no reason to wait. The data added nearly 80,000 net new jobs in November, or an average of 33,000 a month in the last year. The unemployment rate fell to a near-record low of 5.9%. And more important, wage gains have accelerated in the past few months, advancing 2.8% on a one-year basis.

"The central bank just cannot ignore the strong labor market," said Stefane Marion, chief economist at National Bank Financial, who predicted the Bank of Canada would raise rates in January.

Derek Holt, an economist at Bank of Nova Scotia, said the strong jobs report has thrown a bit of a wild card into what was expected to be a rather ho-hum policy announcement. "How the Bank of Canada manages the delicate balance of mixed data versus its various uncertainties will be keenly watched by markets," said Mr. Holt, who predicts the next rate rise would unfold in April.

Write to Paul Vieira at [email protected]

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Interest Rates"
10:36aSurprise inflation drop muddies outlook for interest rates
RE
04/17FED'S EVANS : Fed Can Raise Rates Gradually -- Update
DJ
04/17FED'S EVANS : Fed Can Raise Rates Gradually
DJ
04/16Euro zone bond yields at three-week highs as Syria escalation fears ease
RE
04/12British hedge fund manager Odey short UK government bonds on QE bet
RE
04/12BOK chief says decision to keep rates steady was unanimous
RE
04/11U.S. TIPS breakeven rates hold steady after March CPI data
RE
04/10Pimco says expects to remain "fairly neutral" on Italian bonds
RE
04/10Trade war could have negative impact on exchange rates - ECB's Nowotny
RE
04/09Correction to U.S. Government Bonds Article
DJ
Latest news "Interest Rates"
Advertisement