The Bank of Canada will hold its overnight rate steady next week and through the rest of the year, according to a majority of economists polled by Reuters, most of whom stuck to the same outlook \u200bthey had before the U.S.-Israeli war with Iran.<\/p>\n
While financial markets expect the central bank to lift its overnight rate in \u200cthe fourth quarter, economists say a hike would only be needed if the surge in energy prices leads to sustained higher inflation. A weak economy and a slack labour market argue against an increase.<\/p>\n
Despite rising fuel prices, March inflation was 2.4%, within the BoC\u2019s target range of 1% to 3%. Governor Tiff Macklem said last week a rise \u200bin short-term inflation expectations should not worry the central bank.<\/p>\n
Surging oil prices have strained consumers in Canada like everywhere else, \u200bbut the country\u2019s position as a net exporter provides the economy with some cushion to weather the blow.<\/p>\n
All 41 economists in the April 21 to 24 poll expected the BoC to leave the overnight \u200brate at 2.25% on April 29 and more than 80%, 33 of 41, predicted it to stay unchanged this year. In a March poll, \u200b76% of the respondents saw the central bank holding rates in 2026.<\/p>\n
\u201cBecause of softening core inflation, it does give the Bank of Canada a lot more room to be flexible and patient,\u201d said Claire Fan, a senior economist at RBC.<\/p>\n
\u201cThey can wait for actual concrete signs of risk of inflation climbing higher, broadening \u200band persisting…as opposed to rushing to make a decision.\u201d<\/p>\n
Inflation is forecast to average 2.9%, 2.7% and 2.5% in the current and upcoming quarters, \u200baround 50 basis points higher than predicted in January, medians showed.<\/p>\n
Those upgrades have laid the path for a significant minority of economists, 14 of 34, to \u200cpredict at \u2060least one rate increase by the end of March next year.<\/p>\n
Canada\u2019s free trade agreement with the U.S. and Mexico is up for renegotiation this summer. Janice Charette, Canada\u2019s chief trade negotiator to the U.S., said she did not expect both countries to resolve all issues before the July 1 deadline, but that would not mean the agreement, called USMCA, will collapse.<\/p>\n
\u201cAfter energy prices settle down the focus is going \u200bto turn entirely to…where the USMCA \u200bis headed. And frankly, I\u2019m \u2060a bit concerned on that front. I am concerned trade is going to continue to be a drag on the Canadian economy,\u201d said Douglas Porter, chief economist at BMO Capital Markets.<\/p>\n
Canadian GDP will grow 1.2% \u200bin 2026, down from 1.7% in 2025, poll medians from the April and January polls showed. This \u200bweaker growth creates \u2060an unfortunate combination with rising inflation but does not quite constitute stagflation, said Porter.<\/p>\n
Stagflation is usually defined as an extended period of low or no growth, high inflation and rising unemployment.<\/p>\n
The 2026 unemployment rate forecast was revised to 6.6% in the April poll, down from 6.7% seen in January\u2019s \u2060survey.<\/p>\n
\u201cWe expected \u200bthe labour market improvement to be very choppy,\u201d said RBC\u2019s Fan, attributing job losses \u200bto the slowdown in sectors exposed or dependent on U.S. demand.<\/p>\n
\u201cAs domestic demand picks up later this year, it\u2019s going to continue to support that improvement, balancing the trade \u200bweakness.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The Bank of Canada will hold its overnight rate steady next week and through the rest of the…\n","protected":false},"author":2,"featured_media":626247,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":{"0":"post-626246","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-alberta","9":"tag-arts-news","10":"tag-bc","11":"tag-breaking-news","12":"tag-breaking-news-video","13":"tag-british-columbia","14":"tag-business","15":"tag-ca","16":"tag-canada","17":"tag-canada-news","18":"tag-canada-sports","19":"tag-canada-sports-news","20":"tag-canada-trafficcanada-weather","21":"tag-canadian-breaking-news","22":"tag-canadian-news","23":"tag-economy","24":"tag-education","25":"tag-environment","26":"tag-federal-government","27":"tag-foreign-news","28":"tag-globe-and-mail","29":"tag-globe-and-mail-breaking-news","30":"tag-globe-and-mail-canada-news","31":"tag-government","32":"tag-life-news","33":"tag-lifestyle","34":"tag-local-news","35":"tag-manitoba","36":"tag-national-news","37":"tag-new-brunswick","38":"tag-newfoundland-and-labrador","39":"tag-northwest-territories","40":"tag-nova-scotia","41":"tag-nunavut","42":"tag-ontario","43":"tag-pei","44":"tag-photos","45":"tag-political-news","46":"tag-political-opinion","47":"tag-politics","48":"tag-politics-news","49":"tag-quebec","50":"tag-sports-news","51":"tag-technology","52":"tag-travel","53":"tag-trudeau","54":"tag-us-news","55":"tag-world-news","56":"tag-yukon"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/626246","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=626246"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/626246\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/626247"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=626246"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=626246"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=626246"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}