Bank of Canada set to hold rates steady for fifth time
Economists expect no policy shift Wednesday, though central bank messaging on global risks will be closely watched as recession concerns mount.
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The Bank of Canada is expected to hold its benchmark interest rate at 2.25 per cent when it meets Wednesday, the fifth consecutive decision to keep borrowing costs unchanged.
Economists say the real story will be in how the central bank characterizes the economic outlook. Governor Tiff Macklem previously warned that monetary policy "may need to be nimble" as the bank monitors the fallout from the Iran war on energy prices and the outcome of negotiations over the Canada-U.S.-Mexico Agreement.
Financial markets were pricing in a 95 per cent likelihood of a hold as of Friday. The latest GDP data showed Canada in a technical recession—two quarterly contractions in a row—though some economists believe the picture isn't as dire as past downturns.
"Being on the sideline is the most prudent when you are driving in the fog," said RBC senior economist Claire Fan, who noted the central bank will likely emphasize flexibility while cautioning against hasty moves. The economy is currently "in no fit state for higher rates," according to Capital Economics analyst Bradley Saunders, even as global oil benchmarks remain volatile.