Stephen Poloz, Governor of the Bank of Canada, holds a press conference at the National Press Theatre in Ottawa on Wednesday, June 8, 2017. With the Bank of Canada nearing its next policy decision, governor Stephen Poloz is reiterating his message that his 2015 interest-rate cuts appear to have done their job. THE CANADIAN PRESS/Sean Kilpatrick

Stephen Poloz, Governor of the Bank of Canada, holds a press conference at the National Press Theatre in Ottawa on Wednesday, June 8, 2017. With the Bank of Canada nearing its next policy decision, governor Stephen Poloz is reiterating his message that his 2015 interest-rate cuts appear to have done their job. THE CANADIAN PRESS/Sean Kilpatrick

Bank of Canada to give economic update, expected to be patient on rates

In its April outlook, the bank predicted relatively weak growth of 1.3 per cent in the second quarter

Bank of Canada governor Stephen Poloz will share his latest take on the economy Wednesday in an update that’s expected to signal more patience on the key interest rate.

The central bank’s policy-makers are widely expected to hold the trend-setting rate steady as Canada exits a sharp slowdown that nearly brought the economy to halt at the start of the year. The bank’s interest rate has been at 1.75 per cent since last October.

Even with the unexpectedly strong rebound, those looking for fresh hints about the timing of the bank’s next policy move — hike or cut — will likely have to wait a little longer, several experts say.

“We really do think we’re in a prolonged pause right now as they just wait and see,” said Alicia Macdonald, principal economist for The Conference Board of Canada.

“There are a lot of downside risks to the forecast right now stemming from the global economic outlook and the bank will not ignore that in their statement. I think we’re going to see a very balanced statement and no direction in terms of when we might see policy rates move.”

The Bank of Canada will also deliver Wednesday its updated quarterly projections, which will reflect the economy’s healthy performance in recent months. The run of positive data has included the labour market’s best six-month stretch of job creation to start a year since 2002, even though June’s headline employment number came in flat.

READ MORE: CMHC reports pace of housing starts in Canada jumped higher in June

In its April outlook, the bank predicted relatively weak growth of 1.3 per cent in the second quarter. After the solid spring, many analysts are now expecting growth of between 2.5 and three per cent.

Stephen Brown, senior Canada economist for Capital Economics, said he’ll be looking for any adjustments to Poloz’s late-2019 projections to see if the bank sees the second-quarter bounce back as a sign of fresh momentum or just a short-term lift.

Brown said his team, which he admits has one of the more ”bearish” outlooks for the Canadian economy, views the second-quarter improvement as simply the fading of temporary factors. And while he doesn’t expect the bank to provide any signals on its next policy move, Capital Economics is forecasting a rate cut in October.

He predicted the second half of 2019 to see a drop in residential investment, weaker exports due to slowing U.S. growth and for Canada’s over-stretched households to curb spending. The bank’s governing council will also consider positive signs on trade, including a cease fire between China and the U.S. and the lifting of American tariffs on Canadian goods, he said.

“We’re expecting the bank to present a cautiously upbeat tone, but there’s obviously still a lot of questions about the outlook,” Brown said.

He added that any rate cut by the U.S. Federal Reserve at one of its upcoming meetings would be a key development for the Bank of Canada.

The bank, he said, has “a bit of a delicate balancing act at the moment” and will likely want to avoid sending a completely opposite message than the Fed, which has signalled it will cut soon.

In recent months, the Bank of Canada has shown it’s in no hurry to move the borrowing rate — up or down — after raising the benchmark five times between mid-2017 and last fall.

Sal Guatieri, senior economist and director and economic research for BMO Capital Markets, said he’s expecting to hear a cautiously optimistic message Wednesday from a bank that’s unlikely to want to “rock the boat,” even after the strong second quarter.

The Conference Board predicts the next rate move to be an increase, though it only expects it to happen in the second half of 2020. Macdonald said she doesn’t think the anticipated U.S. slowdown later this year will be enough to warrant a rate cut by the Fed.

The Bank of Canada, however, will need to consider all the global uncertainty, she added.

“The bank is going to want to nudge interest rates up a little bit more, so that they have a bit of ammunition when the next downturn hits.”

Andy Blatchford, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A nurse performs a test on a patient at a drive-in COVID-19 clinic in Montreal, on Wednesday, October 21, 2020. (THE CANADIAN PRESS/Paul Chiasson)
30 new COVID-19 cases, five more deaths in Interior Health

This brings the total number of cases to 7,271 since testing began

The Habitat for Humanity ReStore in the former Kal Tire location in Salmon Arm now has its own truck as well as ‘opening soon’ signs on the building. (Photo contributed)
Salmon Arm ReStore looking for volunteers as setup to begin

Stocking shelves expected to start within two weeks, soft opening in April

Ranchero Deep Creek firefighters respond to a blaze involving two adjacent structures at a property off of Deep Creek Road on Sunday, Feb. 21. The buildings were believed to have been used as part of a cannabis growing operation, and RCMP are investigating. (Sean Coubrough/CSRD photo)
Ranchero Deep Creek firefighters respond to a blaze involving two adjacent structures at a property off of Deep Creek Road on Sunday, Feb. 21. The buildings were believed to have been used as part of a cannabis growing operation, and RCMP are investigating. (Sean Coubrough/CSRD photo)
Shuswap firefighters responding to structure blaze find cannabis grow operation

RCMP investigating, attempting to track down owner of property

Fire crews are on scene in the 400 block of Fourth Avenue SE at 2:30 p.m. on Wednesday, Feb. 24 as smoke billows from a residential building. Motorists are advised to avoid the area. (Jim Elliot - Salmon Arm Observer)
Salmon Arm firefighters respond to smoke in a building on Fourth Avenue SE

Crews were called to the scene at 2 p.m. on Wednesday, Feb. 24

The District of Sicamous announced plans to purchase and manage the Sicamous Medical Centre on Tuesday, Feb. 24. Colleen Anderson and Malcolm Makayev have been overseeing this and other health matters on behalf of the district’s council. (Jim Elliot-Eagle Valley News)
Sicamous to purchase retiring doctor’s business, take over management

Move intended to attract new doctors by allowing them to focus on patient care

Dr. Bonnie Henry talk about the next steps in B.C.'s COVID-19 Immunization Plan during a press conference at Legislature in Victoria, B.C., on Friday, January 22, 2021. THE CANADIAN PRESS/Chad Hipolito
456 new COVID-19 cases in B.C., 2 deaths

Since January 2020, 78,278 have tested positive for the novel coronavirus in B.C.

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic in Toronto on Thursday, January 7, 2021. (THE CANADIAN PRESS/Nathan Denette)
Vaccinating essential workers before seniors in B.C. could save lives: experts

A new study says the switch could also save up to $230 million in provincial health-care costs

The late Michael Gregory, 57, is accused of sexually exploiting six junior high students between 1999 and 2005. (Pixabay)
Former Alberta teacher accused of sexually assaulting students found dead in B.C.

Mounties say Michael Gregory’s death has been deemed ‘non-suspicious’

According to a new poll, a majority of Canadians want to see illicit drugs decriminalized. (THE ASSOCIATED PRESS)
Majority of Canadians think it’s high time to decriminalize illicit drugs: poll

More than two-times the B.C. residents know someone who died from an overdose compared to rest of Canada

Interior Health officially declared a COVID-19 outbreak at Creekside Landing in Vernon on Jan. 3, which was followed by the first death from the virus 10 days later. (Kaigo photo)
COVID outbreak over at Vernon care home

Creekside Landing cleared of coronavirus, despite additional death in last day

(Stock photo)
EDITORIAL: The freedom to read

Books have been challenged many times in the past

The dam at Thirsk Lake, west of Summerland, was expanded in 2007. A crack has now been discovered where the old and new portions of the dam meet. (Summerland Review file photo)
Crack at Thirsk Dam to be examined

Reservoir west of Summerland was expanded in 2007

(Black Press Media file photo)
B.C. residents can reserve provincial camp sites starting March 8

B.C. residents get priority access to camping reservations in province

Most Read