Analysts Forecast That Bank Of Canada Will Hold Interest Rates Steady

Analysts expect that the Bank of Canada will continue to hold interest rates steady at its next policy meeting on Wednesday as the country adjusts to an economic slowdown.

All 24 analysts surveyed by Bloomberg forecast that the central bank will leave its benchmark overnight rate at 1.75%. It would mark a fourth straight hold by the Ottawa-based Bank of Canada.

The more important question is whether a run of disappointing Canadian economic data, coupled with slowing global growth and concerns about a U.S.-China trade war, will prompt Bank of Canada Governor Stephen Poloz to end the previous cycle of interest rate increases. Even amid all the recent concern, Governor Poloz has been reluctant to abandon the idea that his next step could be higher rates. But in recent weeks, Governor Poloz has stopped talking about higher interest rates, raising speculation that he’s planning to formally drop the central bank’s hiking bias.

The case for a prolonged pause on interest rates has grown since Canada’s central bank last raised borrowing costs in October 2018. Canada’s economy stalled in the final quarter of last year, as oil prices fell and households reined in spending. Data for the early months of 2019 show a slowing economy. Swaps trading suggests investors are more likely to be betting on a Bank of Canada rate cut over the next year, rather than another interest rate hike.