Earlier this week, the Bank of Canada kept the overnight rate at 1.75% for the seventh straight policy meeting, stating that “the current degree of monetary policy stimulus remains appropriate.”
Said announcement came amid the national economy’s consistent performance in recent months, but experts are unable to agree on what these trends indicate for the next few quarters.
Scotiabank deputy chief economist Brett House stated that a rate cut is still possible during the next meeting, scheduled for October 30.
“It is prudent for the Bank of Canada to hold off on a cut until it has more information about developments in the Canadian economy and the White House’s next zigs and zags in its trade battles,” House said.
Meanwhile, Ratehub Inc. co-founder James Laird argued that strong mortgage and housing markets were especially valuable contributors, together building a case for further rate holds.
The BoC doesn’t “seem concerned with a possible return to an overheated housing market, since the mortgage stress test encourages manageable household debt levels,” Laird noted. “This announcement should throw some cold water on the prediction that we could see a rate cut as soon as next month.”
National Bank Financial deputy chief economist Matthieu Arseneau held similar views, emphasizing Canada’s robustness compared to the “disappointing” performances of other leading economic blocs like the Eurozone, the United States, and China.
“Canada remains in the opposite camp with positive economic surprises and higher than expected inflation,” Arseneau wrote in a client note, as quoted by Bloomberg.
“Unless the trade conflict between the Unites States and China escalates further, there is no need for monetary stimulus in Canada.”