With an interest rate hike today (Dec 5) dismissed by most economists, there is debate over the timing of the Bank of Canada’s next increase.
Some are calling for a January 9 increase to 2% with perhaps two more hikes through 2019, while others are expecting a more cautious pace from Governor Poloz especially given more recent economic developments.
TD Economics’ chief economist Beata Caranci and senior economist James Orlando are among those expecting a pause until the spring.
In a Market Insight published Tuesday, the economists point to their tracking of fourth quarter GDP which appears weaker than the BoC’s 2.4% forecast by a whole percentage point.
Also in the mix is the oil industry with Alberta’s production cuts unlikely to prompt an end to heavily discounted prices; and downside risks from slowing global trade momentum, commodity prices, and trade tensions.
“We think two rate hikes are on the docket for 2019, which is a downgrade from our prior view of three hikes in light of the recent domestic risks that have emerged and some unexpected weakening in economic momentum,” the TD Economics economists conclude.