The Bank of Canada is Expected To Make Its Announcement on Interest Rates at 10 a.m.
What will today’s Bank of Canada statement mean for the economy? The Bank of Canada is largely expected to keep its benchmark interest rate steady at one per cent on Wednesday, but economists will be paying close attention to the central bank’s post-meeting statement.
With the Canadian dollar slipping to below 91 cents U.S. for the first time since September 2009, along with dismal employment data in 2013, some expect the bank to address weak inflation, which has been consistently below the ideal target of two per cent.
“Some of the supports for the Canadian dollar have been fading away. Whether it’s commodity prices that aren’t rising any longer or the expectation that the Bank of Canada was going to raise rates over the course of 2014, these two (factors) have faded away,” said Dawn Desjardins, RBC’s assistant chief economist.
While she expects the status quo from the Bank of Canada, Desjardins told CTV News Channel on Tuesday that she believes the bank is against lowering the interest rate, which would be good news for the Canadian dollar.
“I think some of the economic news we’ve been getting recently suggests that they will be increasing their forecast for economic growth, so over time this will, we think, put upward pressure on inflation,” she said.
“Of course, all of this happens with a lag, so it will be sometime before they’re raising interesting rates,” Desjardins added.
The bank could indicate interest rates may need to be cut unless inflation rebounds. However, economists say given the government’s concerns about increasing household debt, it’s unlikely.
The Bank of Canada is expected to make its announcement on interest rates at 10 a.m.