The Bank of Canada is widely expected to hold interest rates at current levels when it convenes its first policy meeting of the year later today (Jan. 24).
The consensus view of economists is for Canada’s central bank to hold its trendsetting overnight interest rate at its current level of 5%, which is a 22-year high.
Comments delivered by Bank of Canada Governor Tiff Macklem at a news conference after the interest rate decision is announced will be carefully parsed for clues as to when the central bank will begin lowering interest rates.
A recent poll by the Reuters news agency found that about two-thirds (67%) of economists don’t expect any change in Canada’s interest rates until June of this year, at the earliest.
The Bank of Canada has held its benchmark interest rate at current levels since last summer as data shows that the economy is slowing and inflation is declining.
However, Canada’s inflation rate unexpectedly rose last December to 3.4% due largely to fluctuations in energy prices.
The Reuters poll also found that economists expect the Bank of Canada’s overnight interest rate to fall a total of 100 basis points this year and reach 4%.
Despite the views of economists, futures traders are currently pricing in interest rate cuts for Canada starting in April of this year.