Ahead of the Bank of Canada’s next interest rate decision, one chief market strategist said he expects the central bank to hold rates while acknowledging current risks in the economy.
“I don't think anyone on the Street is expecting a hike or really any adjustment here. We are expecting a hold but also a relatively hawkish bias in the accompanying statement,” Schamotta, said.
“The Bank of Canada is, unfortunately to a very large degree, sort of pinned between a rock and a hard place at this point. They can't respond to the data by cutting rates, but at the same time, they can't continue hiking because they are aware that there are huge downside risks ahead for the Canadian economy,” Schamotta said.
An economic downturn is not likely to turn into a “precipitous slide” given the strength in the labour market and robust global demand, said Schamotta.
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