Brokers now know what the near future holds for rates -- following the Bank of Canada’s decision to hold its overnight rate at ¾ per cent – but what can they expect in the longer-term? Several big bank economists weigh in.
The tone of today’s update implied that the Bank remains “comfortable with the amount of insurance” that was provided by January’s 25 basis point cut to the overnight rate and in line with recent comments by Governor Poloz. Like the Bank, we recently revised our forecast for first quarter growth lower; however, we anticipate a greater snapback in activity in the second quarter (2.5%) based on the view that a large part of the weather-related hit to activity in the first quarter will be reversed.
The forecast presented by the Bank today was largely in line with our view. With the first quarter likely to prove to be the low point for growth this year, we expect that there will not be a need for additional policy stimulus and, therefore, expect the overnight rate to remain at 0.75% for the remainder of 2015.
- Dawn Desjardins, Assistant Chief Economist, RBC Economics
- Avery Shenfield and Nick Exarhos, CIBC economics
- Derek Holt, Frances Donald, and Dov Zigler, Scotia Economics
- Douglas Porter, chief economist for BMO