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Money Bank of Canada expected to resume tightening key interest rate Wednesday

23:06  10 july  2018
23:06  10 july  2018 Source:   cbc.ca

Tariffs, mortgage rules key to Bank of Canada rate decision: Poloz

  Tariffs, mortgage rules key to Bank of Canada rate decision: Poloz The effects of U.S. steel and aluminum tariffs and tighter mortgage rules will "figure prominently" in the Bank of Canada's July decision on interest rates, Governor Stephen Poloz said on Wednesday. In a speech promising increased transparency from the central bank in an age of economic uncertainty, Poloz said there was "a litany of things we simply do not know" these days, which is why the bank is "particularly data-dependent" right now.With the next rate decision set for July 11, Poloz said the bank was working to incorporate in its projections the effects of U.S.

Key interest rate expected to nudge up to 1.5%. CBC News · Posted: Jul 10, 2018 2:04 PM ET | Last Updated: July 10. Many economists expect Bank of Canada governor Stephen Poloz will announce an interest rate hike when the central bank makes its decision on Wednesday .

Bank has hiked key interest rate twice this year. © Fred Chartrand/ Canadian Press Many economists expect Bank of Canada governor Stephen Poloz will announce an interest rate hike when the central bank The Bank of Canada isn't expected to change its benchmark interest rate on Wednesday .

Stephen Poloz wearing a suit and tie: Many economists expect Bank of Canada governor Stephen Poloz will announce an interest rate hike when the central bank makes its decision on Wednesday.© Fred Chartrand/Canadian Press Many economists expect Bank of Canada governor Stephen Poloz will announce an interest rate hike when the central bank makes its decision on Wednesday.

The Bank of Canada is widely expected to boost a key interest rate on Wednesday as it resumes efforts to "wean" the economy off low borrowing costs.

The bank's target for the overnight rate — what major financial institutions charge each other for one-day loans —   has been at 1.25 per cent since mid-January. Since then, the bank has stood firm on three subsequent rate announcements.

That string is generally expected to end this week. As of Tuesday, the implied probability of a rate hike to 1.5 per cent stood at just over 96 per cent, according to Bloomberg.

Bank of Canada's Poloz keeps markets guessing on July rate move

  Bank of Canada's Poloz keeps markets guessing on July rate move Bank of Canada's Poloz keeps markets guessing on July rate moveLoad Error

The Bank of Canada is widely expected to boost a key interest rate on Wednesday as it resumes efforts to "wean" the economy off low borrowing costs. With no change in interest rates expected when the Bank of Canada announces its latest decision this morning, economists and markets will be

The Bank of Canada is widely expected to raise its benchmark interest rate during a policy announcement this week, despite concerns over U.S. trade policy and the threat of tariffs on the automotive sector. Economists from 10 out of 11 primary dealers of Canadian government securities

A hike could lead financial institutions to raise prime rates, and see Canadians pay higher borrowing costs on such products as variable-rate mortgages.

The pending rate announcement comes against a backdrop of somewhat cooler economic growth, gains in employment and inflation running roughly on the Bank of Canada's two per cent target.

"Given that the economy is pretty average at this point, I think that does clear the decks for the bank to slowly but surely get interest rates back to what they would consider to be average or normal." said BMO Capital Markets chief economist Douglas Porter.

"So we're expecting the Bank of Canada to raise interest rates this week."

CIBC is also expecting a hike, which it believes will be the last for this year.

Poloz widely expected to raise rate this week

  Poloz widely expected to raise rate this week After waiting for half a year, Stephen Poloz appears ready to get back on his rate-hiking path this week. Recent signals from the Bank of Canada governor, combined with strong economic data, have experts widely predicting Poloz will raise his trend-setting rate Wednesday from its current level of 1.25 per cent.

The Bank of Canada is widely expected to boost a key interest rate on Wednesday as it resumes efforts to “wean” the economy off low borrowing costs. ‘Process is torturous’: Federal whistleblower says Canada doesn’t protect people who speak out.

Real GDP in Canada is expected to grow by 2.0 per cent in 2018, 2.2 per cent in 2019 and 1.9 per cent in 2020. The overnight rate is the interest rate at which major financial institutions borrow and lend one-day (or "overnight") funds among themselves; the Bank sets a target level for that rate .

"In Canada, economic news has generally improved for [the second quarter], and although that's likely enough to prompt a quarter point hike in rates on Wednesday, it's not as if the evidence of overheating is so overwhelming," said CIBC Capital Markets chief economist Avery Shenfeld in a recent commentary.

No 'comfortable transition'

The Bank of Canada wants to, and needs to, "normalize" interest rates, said Frances Donald, senior economist with Manulife Asset Management.

"We need to wean ourselves off of those super-low interest rates and toward the more normal interest rate environment," she said. "That's not a comfortable transition for any economy, but for our longer-run economic health, it's necessary."

However, not all forecasters believe Bank of Canada governor Stephen Poloz will tighten monetary policy this week.

In a recent commentary, economists at National Bank said deterioration of the international trade outlook since the last rate decision "ought to give pause" to the Bank of Canada.

Bank of Canada expected to resume tightening key interest rate Wednesday

  Bank of Canada expected to resume tightening key interest rate Wednesday The Bank of Canada is widely expected to boost a key interest rate on Wednesday as it resumes efforts to "wean" the economy off low borrowing costs. The bank's target for the overnight rate — what major financial institutions charge each other for one-day loans —   has been at 1.25 per cent since mid-January. Since then, the bank has stood firm on three subsequent rate announcements. That string is generally expected to end this week. As of Tuesday, the implied probability of a rate hike to 1.5 per cent stood at just over 96 per cent, according to Bloomberg.

OTTAWA—The Bank of Canada raised its benchmark interest rate Wednesday in an economy that it predicts The Bank of Canada is expected to raise its trend-setting interest It also said underlying wage growth has been weaker than what would normally be expected in a tightened job market.

OTTAWA — The Bank of Canada kept its key interest rate target on hold Wednesday , but noted the Canadian economy was a little stronger than expected Macdonald also said she’ll be watching what happens with the housing market, which she said the Bank of Canada expects to rebound over the

"Indeed, with the U.S. threatening to instigate a trade war with China, and with NAFTA negotiations stalling, we don't see conditions as supportive of further monetary policy normalization," they said. "Consequently, we expect the central bank to remain on the sideline this week, an opinion that runs counter to the market's view."

Outlook update

Wednesday's rate announcement will also be accompanied by a quarterly update to the bank's outlook for the economy, but several economists said they don't expect the central bank will alter its forecasts.

"We're not expecting major changes in the growth outlook overall, with the bank not going to take a guess on trade barriers that have yet to be announced," said CIBC's Shenfeld.

Assuming that rates do rise this week, Porter said to watch for any indications the bank will move to the sidelines for a while and see what happens on the trade front, or if it will continue "grinding away" with gradual tightening.

The Bank of Canada has three more rate announcements set for this year: Sept. 5, Oct. 24 and Dec. 5.

Scotiabank said it remains more hawkish on future interest rates than the street, as it is forecasting three rate increases over the next six meetings through the first quarter of 2019 — about one more than the markets are expecting.

Follow @MSNMoneyCanada on Twitter.

Canadians feel little pain of rate hikes so far .
Canadians feel little pain of rate hikes so farData released on Friday showed retail sales rose 2.0 percent in May and are on track to expand at an annualized pace of about 4 percent in the second quarter, defying predictions that rising interest rates would douse the long consumer boom.

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