RE:RE:Rate hike tomorrowYOU ARE WRONG REGARDLESS
TOTALLY FALSE https://www.theglobeandmail.com/business/article-bank-of-canada-expected-to-hold-rates-steady-as-economy-stalls/ Bank of Canada expected to hold rates steady as economy stalls
The Bank of Canada is expected to pause its monetary policy tightening campaign this week, weighing stubborn inflation data against growing evidence that the Canadian economy has begun to stall.
Analysts expect the central bank will keep its benchmark interest rate at 5 per cent Wednesday, after hikes in June and July.
There’s a widespread belief on Bay Street that Canadian interest rates have peaked, according to polls and swap market data, with no more hikes needed to wrestle inflation back under control. But economists don’t expect the central bank to signal a formal end to its tightening campaign this week, given the risk that inflation could push higher.
Bank of Canada Governor Tiff Macklem “will need to see more disinflationary momentum for that, and it could be some months before we’ll have enough labour market slack for the bank to be comfortable in stating that rates are high enough to do the job,” Canadian Imperial Bank of Commerce chief economist Avery Shenfeld wrote in a note to clients.
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“But if they skip a hike in September, we expect that the balance of risk calculation will ultimately clarify that rates have in fact peaked for this cycle.”
The Bank of Canada first paused its tightening campaign in January, offering a brief respite to homeowners and other borrowers who had been hammered by eight consecutive rate hikes over the previous year.
This “conditional pause” did not last long. In June, Mr. Macklem and his team raised interest rates again in response to strong consumer spending and employment data, as well as an unwelcome surge in real estate prices through the spring. The central bankers hiked rates again in July and warned that inflation could take longer than previously expected to fall back to the bank’s 2-per-cent target.
Over the past month, however, key economic indicators have begun moving in the direction the bank wants to see as it attempts to slow down the economy to curb inflation.
Canada shed 6,400 jobs in July, and the unemployment rate rose to 5.5 per cent, up half a percentage point over three months. Meanwhile, sluggish retail sales data for late spring and early summer suggest Canadian shoppers are beginning to tap out.
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The strongest evidence of a slowdown came Friday, with the publication of weaker-than-expected GDP data. Economic activity contracted at an annualized rate of 0.2 per cent in the second quarter, Statistics Canada said, led by a drop in new construction and a slowdown in consumer spending, alongside a hit to resource industries affected by wildfires. The Bank of Canada had been expecting 1.5-per-cent annualized growth in the quarter.