Bank of Canada Interest Rate Decision Coming Tomorrow

Tomorrow, the Bank of Canada will make its rate hike decision, though the consensus appears that no change is imminent. A survey of 37 economists predicts that there will not be a rate hike tomorrow and that while it is a slight possibility that there will be a hike in September, it is much likelier to occur in October.
This prediction is not altogether surprising. As far back as early June, economists were pessimistic towards the chances of a July rate hike and only slightly less pessimistic towards a hike in September. However, a number of factors have emerged since then which has ensured that a rate hike isn’t likely to occur any sooner than October.
All this comes with a potential footnote. While the current debt issues experienced by Europe and the US have contributed to the rate hike delay, it is possible that these issues will have knock-on effects that might soon increase the likelihood of a rate hike in September or October. Ongoing debt issues in the major consumer economies of Europe and the US might lead to a belief among investors that demand for commodities, namely those that Canada is a major exporter of, will decline. If, say, demand for oil declines over the next few weeks, so too will demand for the Canadian dollar. Thus, if we soon are in a situation where economic growth is healthy, inflation is high and the Loonie’s value is not so high, the Bank of Canada might be pressed into a rate hike by October, if not sooner. After which, rates will likely continue to rise over the next number of quarters until they reach their expected steady state level of 3%. Consumers looking to consolidate their debt with a second mortgage might be interested in moving quickly to take advantage of these low rates while they are here.