Soft Economy Should Limit Bank of Canada’s Rate Hikes: Capital Economics
Trade uncertainty and slowing immigration levels could restrict how high the Bank of Canada’s benchmark interest rate goes next year, according to a new report published by Capital Economics on Wednesday. The report argues that the risks plaguing Canada’s growth prospects will likely rein in inflationary pressures—limiting the degree of monetary policy tightening needed to keep prices in check.
TL;DR
- Trade uncertainty and slowing immigration may limit future Bank of Canada interest rate hikes.
- Risks to Canada's growth prospects are expected to reduce inflationary pressures.
- This could decrease the need for significant monetary policy tightening.
- The Bank of Canada's benchmark interest rate has been at 2.25 percent since October.
- The bank is evaluating the economic impact of the U.S. trade dispute and the war in Iran.
- Updated economic and inflation forecasts will be released on October 28.