Bank of Canada Governor Tiff Macklem has stressed in recent months that the central bank could raise interest rates again if the economy doesn’t cool and inflation doesn’t drop
, unemployment remains near a record low, and the housing market is showing signs of a rebound.
This isn’t what central bankers want to see at this stage in the business cycle. They believe the economy needs to stall to bring demand and supply back in line, thereby slowing the pace of consumer price growth. If that doesn’t happen, inflation could get stuck above the bank’s 2-per-cent target, Mr. Macklem has argued in recent appearances.
A growing number of Bay Street analysts are betting on at least one more quarter-point interest-rate increase this summer, with the more hawkish among them expecting a rate hike today. Even cautious observers, who think the bank will remain on hold today, aren’t ruling out the possibility of a rate hike.
The monetary policy decision will be released at 10am EST. There will be no updated economic forecast, and no press conference. Deputy governor Paul Beaudry will deliver a speech explaining the rate decision on Thursday at 3:25pm EST.
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