Once again the Bank of Canada is preparing to make an interest rate announcement this week with little expectation of any change from the current 1.75%.
But the focus will be on the bank’s outlook for the coming quarters as it grapples with some challenges while also reflecting on some positive recent data.
Avery Shenfeld, chief economist at CIBC World Markets, says that Canada’s economy is looking rosier than some of its peers with a rebound in the economy in the latest quarterly data.
But he also notes that the BoC will acknowledge the global environment which has shown weaker industrial activity and the potential for the Fed to cut rates.
Currently, BoC governor Stephen Poloz still suggests that the bank’s next rate move will be a slight increase; but Shenfeld along with many peers is still expecting there will be a cut in interest rates, although not until 2020.
That’s due to the expected economic slowdown by the end of 2019 and the firming of the Canadian dollar.
Other in-focus data this week is housing starts, with CIBC expecting a continuation of the upward trend seen in April and May.
Although there have been some positive signs for the housing market, Shenfeld warns that its limits could soon be tested as “many of the prior headwinds” for the market remain.