Interest rates decision is due today and a panel of experts agree on what it will be
The latest interest rate decision from the Bank of Canada is due at 10am ET, but what is it likely to be?
The announcement, along with the central bank’s Monetary Policy Report, and the press conference that follow, will be closely watched by struggling households, especially those with a mortgage. But experts are confident they won’t get a nasty surprise.
A panel of leading economists and other experts convened by Finder are 100% agreed that Governor Tiff Macklem and his team will pause rates at 5%.
“Economic growth is cooling markedly, the housing market has lost steam, the labour market is showing signs of loosening, and the BoC’s Business Outlook Survey points to notable weakening in activity. Inflation is likely just mild enough to keep them on the sidelines,” said BMO Capital Markets chief economist Doug Porter.
The others on the panel share the sentiment, for example Avery Shenfeld, managing director and chief economist at CIBC said: “There’s now substantial evidence that current interest rates are high enough to have a material impact on Canadian economic growth which should, with a lag, reduce inflation in the coming year [and remove the need for a rate hike].”
Economic factors to watch
Finder also asked the panel to share the key economic measures that should be closely monitored by those worried about rising interest rates or sticky inflation.
They include:
- GDP data: “GDP data will reflect whether we are heading to a (technical) recession,” said Murshed Chowdhury, associate professor of Economics at the University of New Brunswick.
- Yield curve: "The extent of the surge in global interest rates have on [bond] yield curves, [which is] an unwelcome development for the highly leveraged Canadian economy,” said Sebastian Lavoie, chief economist at Laurentian Bank.
- Supply-side problems: "The BoC continues to rely on a faulty model, and fails to consider that current inflation was mainly driven by supply side events — such as the ongoing effects of COVID, war and extreme weather events," said Will Dunning, president of real estate market consultancy Will Dunning Inc.
