The Bank of Canada on Wednesday is expected to keep rates on hold at a 22-year high of 5% after the economy unexpectedly shrank in the second quarter, analysts said. The central bank hiked rates by a quarter point in both June and July, and then said it was prepared to raise rates again to tame inflation that has remained above the bank's 2% target for 27 months. 'The Bank of Canada has the cover in the GDP data to stay on pause with a hawkish bias,' Derek Holt, vice president of economics at Scotiabank, said in a note.
OTTAWA - The Bank of Canada on Wednesday is expected to keep rates on hold at a 22-year high of 5% after the economy unexpectedly shrank in the second quarter, analysts said.
"The Bank of Canada has the cover in the GDP data to stay on pause with a hawkish bias," Derek Holt, vice president of economics at Scotiabank, said in a note. The second-quarter 0.2% annualized gross domestic product decline was far lower than the Bank of Canada's forecast for 1.5% annualized GDP growth, a sign the economy could have already entered a recession.Money markets sharply trimmed bets for an interest rate increase after the growth figures were published and now are pricing in a less than 7% chance for one, compared with 23% before.
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