We think the Bank of Canada is unlikely to raise interest rates from the current 1% anytime soon. Not only does the marginal improvement in current economic conditions partially reflect temporary factors, external downside risks to the outlook have not diminished. More importantly, the government is tightening down on bank lending rules to households in response to concerns about housing bubbles and household debt, while carrying out austerity measures that will effectively downsize government. All things considered, we think that interest rate cuts before year end or early next year cannot be completely ruled out. More generally, we anticipate a prolonged period of very low interest rates in Canada.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services