By Nushaiba Iqbal <\/p>\n
BENGALURU, Aug 28 (Reuters) – The Bank of Canada will keep its overnight rate at 2.25% on Wednesday and leave it unchanged for at least another year, according to a Reuters poll of economists who have \u200cnot changed their outlook following the suspension in trade talks with the United States. <\/p>\n
Policymakers have held rates steady since \u200cOctober, watching for signs of rising inflation and weaker economic activity since the start of the U.S.-Israeli war with Iran in late February along with mounting trade \u200btensions with its main export market. <\/p>\n
Inflation was already at the top of the BoC’s 1-3% target range in July. But stable core inflation suggests demand remains weak and taken together with an expected recent economic recovery gives the central bank room to wait before raising rates. <\/p>\n
The survey, taken after Canadian Prime Minister Mark Carney walked away from the latest round of tariff negotiations on August 22 and announced retaliatory \u200ctariffs and support measures for affected businesses, showed \u2060rates on hold at 2.25% for the rest of this year and until the third quarter of next year. <\/p>\n
All 35 economists expected the overnight rate to stay on hold at the conclusion of the \u2060Bank’s policy meeting on September 2, in line with market pricing. <\/p>\n
The BoC is forecast to raise the rate to 2.50% in the fourth quarter of next year, unchanged from expectations in a July poll. <\/p>\n
“In the near term, any concerns over inflation ahead are roughly offset by risks to \u200beconomic growth \u200bfrom trade tensions, leaving the Bank in a watchful-waiting stance,” said Avery \u200bShenfeld, managing director and chief economist at CIBC Capital \u200cMarkets. <\/p>\n
Nearly half of economists who provided a view, 47%, said the BoC will raise rates at least once by end-Q2 2027. <\/p>\n
Canada’s exports to the U.S. continue to be shielded by the U.S.-Mexico-Canada free trade agreement, which expired on July 1 and which the U.S. has opted to review on an annual basis rather than extend for another 10 years. <\/p>\n
Some economists raised concerns about added inflation pressure stemming from recent currency weakness. <\/p>\n
“The Canadian dollar has already weakened because of this failure of the trade talks. So that is going \u200cto be more of an inflationary impact,” said Jennifer Lee, senior economist and \u200bmanaging director at BMO Capital Markets. <\/p>\n
But for now, an escalation in the trade \u200bwar is expected to mainly be a drag on \u200bgross domestic product growth in Canada rather than a source of increased inflation pressure. It will be \u200coffset to some extent by the federal government’s support \u200bmeasures, some economists said. <\/p>\n
“The way I \u200bthink about the (recent)…tariffs is, it helps to offset some of the stronger data we’ve seen over the last few months,” said Robert Both, macro strategist at TD Securities, adding the economic impact would be narrow enough it could still allow \u200bthe BoC to hike rates next year. <\/p>\n
The Canadian \u200ceconomy likely grew an annualized 3.4% last quarter, recovering from a technical recession, according to a separate Reuters poll \u200bahead of official data due on Friday. <\/p>\n
(Other stories from the Reuters global economic poll) <\/p>\n
(Reporting by Nushaiba Iqbal; Polling by \u200bSarupya Ganguly; Editing by Hari Kishan, Ross Finley and Chizu Nomiyama ) <\/p>\n","protected":false},"excerpt":{"rendered":"By Nushaiba Iqbal BENGALURU, Aug 28 (Reuters) – The Bank of Canada will keep its overnight rate at…\n","protected":false},"author":2,"featured_media":875696,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[303694,303696,34653,26308,45,49,48,7028,46,10719,271207,303695,303693,43162,32387,77274,1213],"class_list":["post-875695","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-2-25","tag-aug-28","tag-bank","tag-boc","tag-business","tag-ca","tag-canada","tag-canadian","tag-economy","tag-july","tag-july-1","tag-nushaiba-iqbal","tag-nushaiba-iqbal-bengaluru","tag-overnight","tag-reuters","tag-the-bank-of-canada","tag-wednesday"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/875695","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=875695"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/875695\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/875696"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=875695"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=875695"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=875695"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}