The Globe and Mail reports in its Monday, July 14, edition that the Bank of Canada is all but certain to stand still on monetary policy when it issues its new update this week.
The Globe's David Parkinson writes that the central bank releases both its regularly scheduled interest rate policy statement and its quarterly monetary policy report Wednesday morning. While there is no risk Governor Stephen Poloz will alter the bank's key policy rate, which has held at 1 per cent for nearly four years, Mr. Parkinson says the markets will be watching intently for changes in the central bank's economic and inflation outlooks.
The recent surprising surge in inflation will test the bank's resolve in its low-rates-for-longer policy stance. At the same time, it will be balancing this against disappointing economic performance, a divergence in growth between Western and Eastern Canada, a stalled labour market and a rising Canadian dollar.
"It's not going to be an easy call for them," says National Bank Financial economist Stefane Marion. He says: "It's going to be hard to remain soft on inflation. [But] there are some challenges. We have a two-speed economy."
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