Bank of Canada will stay put this year, rate cuts unlikely
The Bank of Canada will keep its key interest rate steady at 4.50% through 2023, according to most economists polled by Reuters, with an even smaller minority now expecting an interest rate cut by year-end than a poll taken a month ago.
Markets still expect more than 50 basis points of cuts, pricing fuelled by fears last month over stresses in the U.S. and European banking sector, despite Canada’s economy and labor market performing better than expected.
In a speech last week, BoC Deputy Governor Toni Gravelle said the Canadian banking system had a well-earned international reputation for stability, suggesting policymakers are more focused on inflation and how the economy is performing.
In March, the BoC was the first major central bank to stop its aggressive hiking cycle and is on what it calls a conditional pause. So all 33 economists polled March 31-April 6 said it will hold its overnight rate at 4.50% on April 12.
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