U.S. investment bank Goldman Sachs (GS) says the Bank of Canada is likely to hold interest rates steady in September before issuing a final rate increase in October of this year.
Canada’s central bank will take the latest economic data “as an encouraging signal that the latest hikes are working,” said Goldman Sachs in a new report.
Goldman’s outlook on interest rates in Canada comes days after the latest data showed that the country’s economy stagnated in this year’s second quarter, registering no growth.
Goldman Sachs said that Canada may already be in the middle of a “technical recession” if economic output shrinks again in the current third quarter.
A recession is typically defined as two consecutive quarters of negative economic growth.
The Bank of Canada is expected to announce its latest decision on interest rates on September 6. Futures markets are also betting that the central bank will hold rates at current levels.
The Bank of Canada’s trendsetting overnight interest rate currently stands at 5%, its highest level in 22 years.
