In Wednesday’s policy announcement, Bank of Canada governor Stephen Poloz said that Canadian interest rates would be going up “over time.” Noted Toronto economist David Rosenberg adding that in his view, “it will be a long time.”
He said global uncertainty, moderating U.S. economic growth and trade concerns – meaning NAFTA – and even robust employment numbers aren’t enough to move the bank from their current stance.
Rosenberg, in Thursday morning’s Globe and Mail, called the bank’s stance “cautious,” which is a wait-and-see mode, meaning the bank will be watching trade, housing, bank regulations, fiscal policy, minimum wage hikes and the impact this has on the labour market.
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Raising rates would do more to compound the uncertainties that Poloz is concerned about.
Therefore, Rosenberg forecasts if the U.S. goes ahead with three planned rate hikes in the interim, and they probably will, it could take the loonie down to US$0.73.
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