28 May 2019

Meanwhile, investors even predict a rate cut. In their opinion, there’s an 80% possibility of a rate decline during the next 12 months. In case of the U.S., they expect even two cuts.

However, the Bank of Canada hasn’t hinted at plans to reduce rates. First of all, the officials don’t want to encourage more borrowing, as the economy is already facing high debt levels. At the same time, underlying price pressures, have been remaining at around 2% for more than a year. Just last week, Poloz kept insisting that higher rates are necessary in the future.

Another issue is that federal elections are coming. Although the BoC has changed the rate earlier before a general vote, it’s still important to consider the political optics of any change.

The most probable reasons for the Bank to start acting again could be sharp and unpleasant global economic or financial events, including growing trade war between the U.S. and China, a decline in global financial markets, a rate cut in the U.S.

Inside Canada, there are no obvious reasons for Poloz to change the rate during the next six months.

Tomorrow’s rate meeting will be followed by four more this year: on July 10, Sept. 4, Oct. 30 and Dec. 4