Bank of Canada Likely to Hold Rates as Inflation Risks Ease and Growth Remains Soft, Say Economists
The Bank of Canada is expected to leave its policy rate unchanged on Wednesday for the sixth time in a row, acknowledging that inflation risks have eased as oil prices have fallen sharply in recent weeks, according to economists. Policymakers are also likely to reiterate that there is little evidence higher energy prices have spilled over into broader inflation, while emphasizing that they remain prepared to tighten policy if inflationary pressures re-emerge, said economists. UBS said in a note last week it sees a hold decision at the BoC, keeping the policy rate at 2.25%. "We expect the signal to remain standing pat amidst ongoing uncertainty with the Governor likely to lean into the scenarios that could lead to hikes (broader inflation pressures and stronger growth) or cuts (ongoing economic weakness with narrowly driven headline price pressures)." Canada's central bank is likely to concede that growth has fallen short of its April forecast. Although activity is expected to recover in the second quarter, persistent economic slack and trade uncertainty support a cautious, wait-and-see policy stance. "Growth still looks tepid, with Q1 GDP undershooting the Bank of Canada's.
The Bank of Canada is expected to leave its policy rate unchanged on Wednesday for the sixth time in a row, acknowledging that inflation risks have eased as oil prices have fallen sharply in recent weeks, according to economists.
Policymakers are also likely to reiterate that there is little evidence higher energy prices have spilled over into broader inflation, while emphasizing that they remain prepared to tighten policy if inflationary pressures re-emerge, said economists.
UBS said in a note last week it sees a hold decision at the BoC, keeping the policy rate at 2.25%. "We expect the signal to remain standing pat amidst ongoing uncertainty with the Governor likely to lean into the scenarios that could lead to hikes (broader inflation pressures and stronger growth) or cuts (ongoing economic weakness with narrowly driven headline price pressures)." Canada's central bank is likely to concede that growth has fallen short of its April forecast.
Although activity is expected to recover in the second quarter, persistent economic slack and trade uncertainty support a cautious, wait-and-see policy stance. "Growth still looks tepid, with Q1 GDP undershooting the Bank of Canada's.