'All but rules out a cut in April': What economists say about the Bank of Canada's hold
The Bank of Canada held its benchmark lending rate at five per cent on Wednesday and gave little away in its official statement for when it might be ready to start cutting.
Here’s what economists are saying about the decision and where interest rates go from here.
The Bank of Canada kept its cards close to its chest for the timing of interest rate cuts, Avery Shenfeld, chief economist at CIBC Capital Markets, said in a note following the rate announcement.
“The Bank of Canada kept rates unchanged, and didn’t make any great leaps towards an actual rate cut today,” he said. “The overall message is that it’s too early to cut, and that they need to see more progress on inflation.”
On inflation, the central bank said there has been progress, but nonetheless stuck to its message that it remains “concerned” and wants to see further improvement, especially in its two preferred consumer price index measures — CPI-median and CPI-trim. Still, Shenfeld was surprised there was no mention of an inflation measure that strips out mortgage interest costs.
The economist now expects the Bank of Canada to provide clearer direction in April when it releases a new Monetary Policy Report, “which in addition to a fresh forecast, should show enough optimism in the battle against inflation to set markets up for a rate cut in June,” he said, “assuming the data in the coming month point in that direction.”
Laurentian Bank of Canada is pushing its forecast for the first interest rate cut to July or September and cutting its call on the total reduction for the year to 75 from 125 basis points.
Sebastien Lavoie, chief economist, said in a note on the March 6 decision that the inflation situation is “far from normal,” with about 50 per cent of the
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