Carney Revokes His Inclination of Rate Hikes

This article was last updated on April 16, 2022

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The Governor of the Bank of Canada, Mark Carney, stated on Wednesday that his fondness of raising interest rates is becoming “less imminent” in view of the risks it puts the economic growth amidst tepid global demand and high household debt in Canada. Carney confessed in the press release that “the case for adjustment of interest rates has become less imminent,” still stating that “over time, rates are more likely to go up than not.”

The statement was made by Carney after the Bank had released its newest monetary policy report, which forecasted a comparatively healthy growth for Canada in the coming year generally because of the improved exports as the global economy begins to restore. The declaration of the bank included that Canada’s actual gross domestic product has only beefed up by one per cent in the July-September period, which can be related to the momentary factors and unexpectedly weak global conditions. This figure was the half of the predictions made previously in July.

However, according to Carney, the key reason  for his decision was the temporary production shutdowns in the oilpatch during the summer. He stated that “the bank expects growth in the Canadian economy to pick up in the coming quarters to a somewhat faster pace than that of its production potential.” He added that “the pick-up in growth from its trough in the third quarter of this year is expected to be driven primarily by a modest increase in net exports. This balances ongoing competitiveness challenges (high dollar) with the projected improvement in the growth of foreign activity.”