Canada’s economic picture has become less robust is recent days. In turn, every one of Canada’s 12 primary securities dealers is now predicting a 1/4% rate cut at the Bank of Canada’s Tuesday meeting.
What happens after Tuesday is the bigger question. Overall, most analysts expect the BoC to hold pat until at least September.
BMO economist Sal Guatieri says, “Given that credit concerns are waning in Canada, there’s less need for the Bank of Canada to cut rates further” after its June 10 meeting.
BMO economist Doug Porter agrees, speculating that the probability of further rate cuts is “nearing an end.” Porter says, “Between higher than expected CPI inflation, soaring oil prices, strong wages and a job market that isn’t falling apart, the Bank is unlikely to cut rates much further.”
CIBC economist Jeff Rubin is actually calling for “a minimum of (one percentage point) of tightening next year as Canadian inflation rates double.” But not everyone is on that boat. TD is on the other end of the spectrum, projecting two more rate cuts by year’s end.
If most forecasters are right, however, Tuesday will be the last BoC cut for a while.
I’m hoping we’ll see an end to rate cuts and some increases in the near future. Inflation fears and general annoyance with poor savings options are my reasons.
Looks like the “pros” really got this one wrong. You might get what you wish for Al.
By the way, this story is a great example for future reference. We often talk about how virtually impossible it is to predict rates accurately over the long-run. This shows how hard it is even over the short run. 12 of 12 is a pretty convincing ratio, especially with guys like TD’s Sheldon Dong saying “It’s almost a sure thing that the weak GDP numbers will cement the Bank of Canada rate cut…”
Just goes to show…
Rob