The Canadian economy is performing well above the standard of the world’s developed economies
Ahead of the Bank of Canada’s policy meeting in September 4, National Bank has argued that the central bank does not need to cut rates.
This is because Canada is considerably outstripping the “disappointing” performances of other leading economic blocs like the Eurozone, the United States, and China.
“Canada remains in the opposite camp with positive economic surprises and higher than expected inflation,” National Bank Financial deputy chief economist Matthieu Arseneau stated in a client note, as quoted by Bloomberg.
“Unless the trade conflict between the Unites States and China escalates further, there is no need for monetary stimulus in Canada.”
In July, the BoC decided to hold its interest rate at 1.75% for the sixth consecutive policy meeting.
An inflation rate of 2% during that same month pulled down the odds of a BoC rate cut even lower, according to Bloomberg’s polling of economists in early August.
Immediately before the Statistics Canada numbers were released, traders were betting on one-in-five odds for a September rate cut, in response to anxiety surrounding the possibility of a global recession.
However, the reading pointed towards a stable, robustly performing economy. This led to much lower chances for a rate cut next month, at 16.8% as of August 28. The probability of an October cut remained high, at 61%.
