The prospect of a rise in interest rates by the Bank of Canada in July remains but recent data releases suggest Governor Poloz may not be in a hurry to act.
An assessment by TD Economics senior economist Brian DePratto points to some disappointing data releases from last week and the potential for more uneasy reading ahead.
Wholesale trade was flat in the second quarter of 2018 and retail figures declined by more than economists had expected.
Then there was inflation data which showed no change from a year ago at 2.2% in May, again not what the market was expecting.
These figures come ahead of the latest GDP data this week and BoC governor Stephen Poloz’s speech Wednesday which will focus on monetary policy and is expected to be widely studied.
There will also be reports this week on household credit data and the Business Outlook Survey; plus of course the potential for further trade tensions to add risk to the economy.
So, will the BoC increase rates?
“Unless these risks are sufficiently reduced or Canada’s economy accelerates markedly, we expect the Bank to move its policy rate by only 50bps (i.e. two hikes) per year,” writes DePratto in his ‘Weekly Bottom Line’. “As it stands, July remains most opportune time to hike, but with inflation remaining tame it is hard to expect much urgency.
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