What a strategist predicts for next Bank of Canada rate decision
Ahead of the Bank of Canada’s next interest rate decision, one chief market strategist said he expects the central bank to maintain rates while acknowledging the economy’s current risks.
Canada’s central bank is set to announce its next policy rate decision on Wednesday. Karl Schamotta, chief market strategist at Copay, said: said in an interview with BNN Bloomberg on Monday.he believes the Bank of Canada will admit downside economic risks stemming from volatility in the US banking sector.
“I don’t think anyone on the street is expecting a rate hike or correction here. There is
Shamotta also said he expected the central bank to recognize “signs of economic resilience” and said it was growing faster than the Bank of Canada forecast. spurred an increase in total spending.
“Unfortunately, the Bank of Canada is caught between a rock and a hard place at the moment. Rate cuts will not be able to keep up with the data, but at the same time there are significant downside risks to the Canadian economy. We can’t continue to raise rates because we know that,” Schamotta said.
Shamotta said he expected consumer spending to decline in the future, which would likely weigh on Canada’s economy and lead to negative growth. He said Canadian consumers are likely to cut back on spending as they deal with higher debt burdens following the unusual rise in interest rates.
central bank of canada Interest rates rose eightfold last yearbefore choosing to keep the policy rate at 4.5% in March.
Shamotta said the recession was unlikely to turn into a “plunge” given the strength of the labor market and the strength of global demand.
“After all, it’s shocking that the Canadian economy hasn’t slowed more dramatically than it has in the past. [and] That employment is as strong as it is now,” he said.
“It seems to me that the belated effects of last year’s tightening cycle are materializing and changing consumer spending patterns, but we haven’t seen that yet.”
Shamotta said he expects consumers to start changing their spending patterns in the “coming months.”
Moreover, he said he did not expect a rate cut from any major central bank this year.