bank of canada plans 1st interest rate hike in 7 years
Last Updated : GMT 06:49:16
Arab Today, arab today
Arab Today, arab today
Last Updated : GMT 06:49:16
Arab Today, arab today

Bank of Canada plans 1st interest rate hike in 7 years

Arab Today, arab today

Arab Today, arab today Bank of Canada plans 1st interest rate hike in 7 years

Bank of Canada building in Ottawa
Ottawa - Arab Today

The Bank of Canada (BoC) will follow up its first interest rate hike in seven years with another increase in October as it charts a course of gradual tightening, with two more hikes expected next year, according to a Reuters poll of primary dealers.
The central bank raised rates on Wednesday, reversing some of the stimuli it added to the economy in 2015 following a plunge in the price of oil, a major export for Canada.
Nine out of the 11 institutions that deal directly with the BoC at debt auctions expect the central bank will hold steady at its next meeting in September but raise rates to 1 percent in October when it updates its economic forecasts.
Just one dealer, Casgrain & Company, forecast that the bank would move in September, while Bank of America Merrill Lynch expects the bank to hold off until January. Economists said staying on the sidelines in September will reassure markets that the process of tightening monetary policy will be a slow one. A pause after the second hike will also allow the central bank to see how the economy is absorbing higher rates.
“The bank will want to see what the impact of that tightening is,” said Josh Nye, an economist at RBC, adding that the bank will also want to see evidence that low inflation is moving closer to its 2 percent target. From there, the median forecast is for the central bank to raise rates by 25-basis points in the second quarter of 2018 and by the same amount in the fourth quarter, bringing rates to 1.50 percent by the end of next year. “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.
Still, that is a slightly faster pace than forecast in a wider Reuters poll taken just before the bank’s rate hike, which forecast rates at 1.25 percent by the end of 2018. The rise in the Canadian dollar, which has appreciated more than 5 percent since policymakers shifted to a hawkish tone in June, is also likely to keep the bank on a slow path of hikes.
“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. One major uncertainty potentially standing in the way of hikes next year is the fate of the North American Free Trade Agreement (NAFTA), which is set to be renegotiated as early as next month. While US President Donald Trump said earlier this year he expected only “tweaks” to America’s trade relationship with Canada, the US has since imposed anti-dumping duties on Canadian softwood lumber. Indeed, a Reuters poll in May found economists believe the trading arrangement may be subject to more than minor tweaks.
The US is Canada’s largest trading partner and the BoC expects the export sector to increasingly help drive economic growth this year and next.
“If the talks went really badly, it would certainly be a barrier to further rate hikes beyond this year,” said Shenfeld. The central bank is also likely to be watching the housing market, where higher borrowing costs could pinch first-time buyers and those refinancing their mortgages. While experts have said higher rates could exacerbate a slowdown in Toronto, Canada’s largest market, the housing market overall should be able to handle what are still relatively low interest rates.
“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.”

Source: Arab News

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

bank of canada plans 1st interest rate hike in 7 years bank of canada plans 1st interest rate hike in 7 years

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

bank of canada plans 1st interest rate hike in 7 years bank of canada plans 1st interest rate hike in 7 years

 



GMT 10:06 2012 Saturday ,28 July

Querrey advances at ATP LA Open

GMT 21:15 2017 Thursday ,01 June

Trump condemns deadly Kabul explosion

GMT 02:15 2017 Thursday ,24 August

Is your country on the Qatar free entry list of 80?

GMT 19:48 2016 Monday ,03 October

Controversial boxing champ Tyson Fury retires

GMT 08:20 2015 Tuesday ,08 December

PC market woes show no sign of easing

GMT 17:27 2017 Tuesday ,25 April

20 Yemeni soldiers killed, injured in explosion

GMT 11:52 2017 Saturday ,30 December

OIC condemns Mar Mina Church attack

GMT 00:03 2017 Saturday ,25 March

Arab Meeting to Examine Anti-Corruption Methods

GMT 13:12 2017 Thursday ,20 April

Deputy premier meets Arab League chief

GMT 14:13 2014 Friday ,10 January

Opel Astra GTC

GMT 18:27 2016 Tuesday ,02 August

Turkish Foreign Minister arrives in Islamabad

GMT 11:27 2016 Tuesday ,13 December

Saudi woman arrested for challenging social norms

GMT 19:56 2017 Thursday ,09 March

Qatar Pavilion Opens at ITB Berlin

GMT 23:34 2013 Thursday ,07 February

New BMW 3 Series Gran Turismo

GMT 12:57 2017 Friday ,13 October

JPMorgan open to digital money if regulated

GMT 04:38 2017 Friday ,10 March

ADNOC opens fifth ADNOC Xpress

GMT 10:30 2017 Friday ,10 November

BDF military contingent honoured

GMT 17:37 2017 Tuesday ,24 January

China jails former Sinopec president for graft

GMT 19:34 2017 Sunday ,14 May

Austria centre-right calls for snap elections

GMT 14:54 2014 Saturday ,29 November

Wall cladding, wallpaper, fabric and wood!
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday