The Bank of Canada (BoC) will likely raise interest rates next Wednesday. This would be BoC’s third interest rate hike in less than a year. After nearly several years of low interest rates, BoC rose the standard interest rate in July and September last year.
A growing and healthy Canadian economy leads to the lowest unemployment rate in over 40 years
A surging Canadian economy added nearly 80,000 jobs in December, for the second consecutive month. 78,600 new job positions in December were reported Friday by Statistics Canada. That’s a number well above the analysts’ predictions of a miniscule 1000 jobs. This growth made Canada’s jobless rate hit a 41-year low of 5.7 per cent
Why is this important?
It’s a strong indicator that BoC will likely raise interest rates in light of a growing Canadian economy. Analysts expect more hikes throughout this year in light of an improving labour market and inflation.
BoC’s next two fixed rate announcements are January 17th and March 7th.
All six big banks are predicting that the central bank will implement an interest rate hike next Wednesday.
I don’t know how much more evidence you need to confirm the likely chance of an interest rate increase. All the banks are calling for it and I’m not going to argue with that.CIBC chief economist Avery Shenfeld said the bank’s business outlook survey was the last piece of the puzzle for a rate hike this month.
“The results are in, and they are more than good enough,” Shenfeld said in a note. “Overall, enough in here on the plus side to cement the case for a rate hike later this month.”
- Financial Post
The real evidence comes from the central bank’s Business Outlook Survey released Monday. A report that has increased the chances of an interest rate hike next Wednesday to nearly 80 per cent.
If there is an 80 per cent chance it is going to rain, I’d bring an umbrella.
The compelling forecast caused by BoC’s latest quarterly survey has converted the only skeptical bank to join the bandwagon and call for a likely rate increase.The Bank of Montreal, the only Canadian bank not predicting a Jan. 17 rate hike last week, changed it forecast after seeing the survey Monday.
“The Bank of Canada’s latest quarterly Business Outlook Survey is healthy enough to convince us that the Bank is likely to hike rates as early as next week’s decision,” said chief economist Douglas Porter.
- Financial Post
There is a lot of evidence to support the move by BoC. It has been stated since last year that the recent two increases would not be the end to the central bank’s paced direction to increase rates, after several years of low stagnant rates.