When the Bank of Canada issued its decision this week to stand pat on interest rates, it was largely what everyone expected. The Canadian economy is having a poor first half, but no need to lower rates as they feel things will improve in the second half. None of the domestic economists are talking about a recession in the wake of the report, although some outside the country are leaning that way.
But the local economic observers agree on one thing – interest rates are unlikely to be changed before December. Interestingly, that is after the federal election and, while no one is saying the central bank is thinking politically, it is hard to overlook.
The feeling is that when rates do change again, they are likely to go up. But, as economists always do, they couch that assertion saying that external forces such as the China-U.S., trade war could change things.
But there are couple things in our favour right now. Lifting of U.S., tariffs on steel and aluminum helps and the weak Canadian dollar is helping exports a bit.