Economists Expect Bank of Canada’s Key Interest Rate to Remain Untouched

This article was last updated on April 16, 2022

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Economists have speculated that the Bank of Canada will keep on maintaining its iconic key policy interest rate unchanged at once percent this morning. It has been kept sustained at the same one per cent level since almost past three years. However, since no change in the actual rate is expected, economists will be eyeing on hints that may suggest that the thinking of the central bank has changed about the state of the country’s economy.

Economists and analysts are not expecting any change in the key overnight lending rate for another year at least. The upcoming rate policy announcement will be the second made by new Bank of Canada governor, Stephen Poloz, who took over the position in June. Until now, Poloz is almost on the same path in of the monetary policy track set by his predecessor, Mark Carney. Poloz informed the House of Commons committee in June that he does not intends to shift from the current low interest rate policy under his leadership, for at least in the short term, regardless of the fears creating imbalances in the economy.

Even though the rates have been kept lowered since quite a long time now, it is also having a distorting impact on the economy, including triggering excessive borrowing. Poloz alleged that the central bank must also consider the risk to the fragile economy of increasing rates too soon, adding that rates are unlikely to rise in the presence of weak growth, both domestically and abroad.

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