Bank of Canada Governor David Longworth thinks Canada’s economy will be weaker than expected. He also thinks inflation will be tamer than expected. What a nice combination for interest rates.
It looks like economists’ see-sawing interest rate speculations are now tilting towards rate cuts. (Keep in mind this can change in a heartbeat.)
5-year bond yields fell to 3.03% yesterday, their lowest close in over 19 weeks. That, of course, is good news for fixed-rate mortgage shoppers. Now we await Friday’s GDP report, which could spike yields higher or take them below the key 3% support level.
In the meantime, here’s what Bay Street has to say:
Bloomberg’s survey of major economists has 13 of 13 predicting the Bank of Canada will leave rates unchanged when they meet next on September 3.
Scotia Capital’s Derek Holt: Predicts a 1/2% rate cut by year-end
Laurentian’s Carlos Leitao: “I think in Canada, if we’re not in recession, we’re mighty close to it.”
Merrill Lynch’s David Wolf: Expects a 1/4% rate cut in both December and January