Bank of Canada may maintain interest rates on September 5th

Speaking from the annual central banking retreat in the U.S., Bank of Canada Governor Stephen Poloz emphasized that he is unworried about the inflation data and the effects on the benchmark rate, even given the current increase to around 3% that was noted in July.

“The Bank of Canada raises and lowers interest rates to keep the CPI advancing at an annual rate of about two per cent. But central banking isn’t like darts, so policy makers give themselves room to maneuver; they are generally comfortable if inflation stays above one per cent and below three per cent.”

With most-policy makers opting to leave borrowing costs at the current levels, some are arguing that the benchmark rate of 1.5% is too low for an economy that is growing at a rate of 3%. StatCan will be releasing the second-quarter GDP survey at the end of the Month which will be taken into consideration by policy makers. The goal has been to raise interest rates gradually and given the most recent increase in July at the last announcement, they may opt to maintain at the next announcement.

“To be sure, Poloz and the Governing Council increased interest rates at back-to-back meetings a year ago, but only after second-quarter GDP surged to 4.5 per cent, more than a percentage point faster than the central bank had predicted. Policy makers also were eager to unwind the emergency monetary stimulus they had deployed to counter the collapse of oil prices in 2015. They are more comfortable with the level of interest rates today.”

Given that this will most likely be the last comments Governor Poloz makes prior to the September 5^th; there has been no concrete direction for the upcoming announcement.

See the full Financial Post article here.