The Bank of Canada’s decision to keep interest rates at 1.00% today and its cautious policy statement indicate that, in contrast to the market view, it is in no hurry to raise rates again soon. We think that markets are over-estimating the economy’s prospects, as growth is still heavily dependent on inflated home values, household borrowing and housing investment. But with signs pointing to a slowdown here, we expect the Bank to remain on hold for longer, before lowering rates in the second half of next year.
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