All eyes on BoC’s next move
Canadian investors will look to the central bank’s interest ratedecision for guidance this week, while U.S. markets are hoping earningsreports from a slew of major companies will help offset some abysmaleconomic data.
Canadian investors will look to the central bank’s interest rate decision for guidance this week, while U.S. markets are hoping earnings reports from a slew of major companies will help offset some abysmal economic data.
The Bank of Canada is expected to raise its key lending rate by a quarter percentage point tomorrow to 0.75 per cent, another indication that Canada’s economic recovery has so far been stronger and faster than in the United States.
An interest rate hike by the Canadian central bank in a move to fight inflationary pressures in the economy could put some pressure on stock markets as they price in “greater odds of follow-up moves through October,” noted Avery Shenfeld, chief economist at CIBC World Markets.
News earlier this month that the Canadian economy created a whopping 93,200 new jobs in June, taking the country’s unemployment rate below eight per cent for the first time since the depths of the recession, “more or less put the lid on the question” of whether the central bank would hike interest rates, said Doug Porter, deputy chief economist at BMO Capital Markets.
Canadian businesses have also helped pave the way for an interest rate hike in a key quarterly survey last week, indicating they were generally upbeat.