CBC News – Montreal – Bank of Canada rate hike seen before pause
September 7, 2010 Leave a comment
The Bank of Canada should boost interest rates one more time on Wednesday and then could leave rates alone for as long as a year, according to many economists.
That is because Canada’s domestic financial strength is getting offset by a quickly flagging U.S. economy, reducing the necessity of raising borrowing costs on this side of the border.
“Even if the BOC ultimately pulls the trigger on Wednesday, it is likely to be the last rate hike for a while,” said Derek Burleton, deputy chief economist at TD Bank Economics.
The Bank of Canada is widely expected to increase its well-followed target rate on Sept. 8 — the next regularly scheduled meeting of the bank’s governors — to one per cent, up from the current 0.75 per cent.
Canadian interest rates are set to rise to one per cent on WednesdayCanadian interest rates are set to rise to one per cent on Wednesday Bank governor Mark Carney has long signalled the need to hike national borrowing costs in order to rein in economic activity and reduce inflationary pressures.
But now, economists believe the central bank will hold rates steady at one per cent after Wednesday’s boost.
TD is forecasting the bank’s rate at one per cent until at least the second quarter of 2011.
The Bank of Montreal figures Canada’s one per cent interest to last even longer, until the July-to-September period in 2011.