Since the last two meetings, the interest rate is stable at 4.5%, but do you think the interest rate will stay the same on June 7?
Stronger-than-anticipated economic results, with feelers from the central bank, indicate that it does not plan to stray from its current rate strategy. With interest rate hikes, BOC was expecting the economy to shrink, but to the surprise of everyone Canadian GDP grew at a pace of 3.1% in Q1. Statistics Canada’s prediction was 2.5% pace for a quarter.
Inflation was at 4.4% in April, going in the reverse direction from the March number which was 4.3%. The expectation was 4.1%.
Even though inflation grew at a 0.1% rate, still worrisome for BOC. Unexpected economic growth even after rate hikes might push BOC off the edge to end their conditional pause on rate hikes.
It’s also possible that June might not be the month for a hike because employment data will be published on June 09. Tricky for BOC! So if unemployment has increased then it would be a mistake to increase the rate, therefore BOC might play safe on Wednesday and wait for employment data to come in.
Also, there is no press conference which made few economists think that there won’t be a hike as resumption of tightening would warrant having the BOC deliver news publicly and not behind closed doors
The stage appears set for more rate hikes, but how many and when is the question?
What do you think? The interest rate will stay the same on June 7? Comment below
