Economist sees increased chance of interest rate cut this year

by Steve Randall12 Aug 2016
Canada could cut interest rates again this year if exports continue to disappoint according to investment bank Nomura.

In a client note, economist Charles St-Arnaud wrote that the BoC’s growth forecast needs better results from non-energy exports and without that growth the current 40 per cent expectation for an interest rate cut could rise.

While a rate cut may benefit businesses that are under pressure from cheaper labour and materials costs in Asia and Mexico, it would also raise a familiar concern: “The BoC should be worried if it reignites household borrowing and the housing market, while business investment is currently not very sensitive to rate cuts,” St-Arnaud wrote.

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