Reuters poll on what to expect next from the Bank of Canada
- 9 of Canada's 11 primary dealers forecast Bank of Canada interest rate hike in October, while 1 sees September hike
- Bank of America Merrill Lynch expects the bank to hold off until January
- Median forecast is for Canada interest rates at 1.0% at end 2017, 1.50% at end 2018
Comments:
- "The bank will want to see what the impact of that tightening is," said Josh Nye, economist at RBC, adding that the bank will also want to see evidence that low inflation is moving closer to its 2 percent target.
- "The bank would want to go for a fairly gradual pace. I don't think they would go more than once a quarter," said Nye.
- "An excessive appreciation of the Canadian dollar would not only slow inflation but also cut into export growth that the Bank of Canada is counting on for the coming year," said Avery Shenfeld, chief economist at CIBC.
- (& on North American Free Trade Agreement renegotiations) "If the talks went really badly, it would certainly be a barrier to further rate hikes beyond this year," said Shenfeld.
- (& on the housing market) "The housing market can certainly live with rates half a percent higher," said Shenfeld. "And the economy can live with a bit less contribution or no contribution from housing as other sectors kick in."
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ps. Primary dealers are those that directly with the Bank of Canada at debt auctions
