A majority of Canadian economists agree that the Bank of Canada will keep its benchmark interest rate at its current level when it meets later today (June 9).
A new Data Finder survey of 21 Canadian economists found that 95% of them think interest rates will remain at 0.25%, where they have been for more than a year now.
More than half of the economists surveyed, 55%, believe the central bank won’t change interest rates for another 10 to 18 months. All of the economists agree the next change will be an interest rate increase.
Raising interest rates affects the rates people pay for mortgages and business loans.
In May, federal budget officer Yves Giroux said he expects the Bank of Canada’s trendsetting interest rate will rise by half a percentage point in the second half of 2022 and eventually reach 2.50%.
Economists and investors will also be watching today for clues on the central bank’s next move to reduce emergency levels of monetary stimulus.
The Bank of Canada was among the first central banks to shift to a less expansionary policy in April, when it accelerated the timetable for reducing its bond purchases.
In April, the Bank of Canada scaled back its weekly purchases of government debt by a quarter to $3 billion. Economists say that will need to come down to $1 billion per week by early next year (2022), which would bring the central bank to a neutral pace of purchases where holdings remain unchanged as securities mature.
