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BoC plans to raise interest rates next year and hold a rush election to avoid significant impact: Reuters poll

File Photo: On May 23, 2017, a sign is drawn outside the Bank of Canada building in Ottawa, Ontario, Canada. REUTERS / Chris Wattie / File Photo

September 6, 2021

By Swathi Nair and Mumal Ratore

Bangalore (Reuters) -Bank of Canada is moving to raise interest rates to 0.50% towards the end of next year, according to economists surveyed by Reuters, despite the sharp decline in economic growth last quarter.

Respondents surveyed from August 30th to September. Three were split almost evenly at the risk that the first rate hike in the post-pandemic cycle would be faster or slower than expected, nine early and eight slow.

Canadian policymakers are expected to keep interest rates unchanged at the September 8 meeting, according to all 34 economists in a broader poll.

The Bank of China plans to shrink its relatively small asset purchase program of $ 2 billion a week again, perhaps increasing by $ 1 billion in October, 16 out of 19 economists said. increase. That’s when the central bank will provide next quarterly updates on its growth and inflation forecasts.

However, policymakers are currently in a tricky situation, at least in the short term, with a staggering 1.1% economic contraction reported in the second quarter, well below expectations for 2.0% growth.

Nevertheless, the median rate hike in the fourth quarter of 2022 remains, with 16 of the 19 general contributors compared to 14 in the July survey, 2022 in the latest poll. We expect at least one rate hike by the end of the year.

Despite the economic resumption from the pandemic blockade, the expected 0.4% contraction in July supports a cautious stance, in contrast to the still very strong expansion south of the border.

Nick Benenbrook, International Economist at Wells Fargo, said:

“Backed by this situation, the Bank of Canada is moving towards a more accommodative monetary policy. Indeed, if growth or inflation is surprised upwards, the first rate hike is now for us. It may come sooner than expected. “

Canada has increased its impetus for coronavirus vaccination in recent months, with approximately 75% of its population receiving at least one vaccination, reducing the possibility of a major blockade by a new variant.

The country is heading for an early federal election on September 20th. However, 90% of 15 out of 18 economists said the results would not have a significant impact on their views on Canada’s economy and monetary policy in the medium term.

Only three respondents said it wasn’t.

Benjamin Reitzes, BMO rate and macro strategist, said:

“No matter who wins, spending seems to increase, but I’m not sure what will happen. So I won’t change my forecasts. At this point, it’s too close to make a call.”

(For other articles in Reuters’ Global Long-Term Economic Outlook Poll Package :)

(Report by Mumal Ratore and Swathi Nair, Voting by Prerana Bhat and Manjul Paul, Edited by Ross Finley and Toby Chopra)



BoC plans to raise interest rates next year and hold a rush election to avoid significant impact: Reuters poll

Source link BoC plans to raise interest rates next year and hold a rush election to avoid significant impact: Reuters poll

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