Stephen Poloz has been the Bank of Canada Governor since June 1 of this year, when his predecessor Mark Carney took off across the pond to go head the Bank of England. In that time he’s seemed very comfortable as the new BoC governor, and he’s made it quite clear that he’s also comfortable with where the key policy interest rate sits too. Yesterday he announced that once again, that rate would not be changed, and economists are guessing that it won’t be changed until at least the end of next year.
In its latest announcement the Bank of Canada stated that it was “appropriate” to leave the interest rate at the 1 per cent it’s been at since 2010, as inflation and growth continue to slacken across the country. As for global economic conditions, the Bank said that while the “dynamic has moderated,” the most recent data also suggest “slightly less momentum overall” in the United States, which is the country that most affects both our inflation and that key interest rate.
As for other global economies, the Bank suggested that emerging markets had slowed, with the exception being China, which has shown “solid” economic growth.
So it wasn’t an earth-shaking announcement, and no changes were made. According to many economists and finance experts, that’s something the Canadian people should continue to expect for at least the next year.
“The bank did precisely what was expected of them today: nothing,” said BMO Capital Markets chief economist Doug Porter in a note to investors. “If anything, the tone of the statement was slightly more dovish, noting the more moderate global backdrop, less certainty on the output gap and still relatively relaxed on the household debt front.”
And Avery Shenfeld, CIBC World Markets economist, was also busy saying much of the same to his own note to investors.
“Add it all up and this is a central bank that believes that growth will pick up in 2014 and that will eventually require higher rates, but which is happy to sit on the sidelines and wait for substantial proof such an acceleration is underway before raising rates,” said Shenfeld. “We still look for the first hike in early 2015, with some risk of a move late in 2014 if there are upside surprises to our forecast.”
The Bank’s next announcement will be on October 23, although from the sounds of it, things aren’t going to change much then either.