Money Poloz widely expected to raise rate this week

03:55  10 july  2018
03:55  10 july  2018 Source:   msn.com

Bank of Canada expected to raise rate

  Bank of Canada expected to raise rate The Bank of Canada is widely expected to raise its trend-setting interest rate today for the first time in six months. Thanks to stronger economic data, experts are predicting governor Stephen Poloz to hike the rate from its current level of 1.25 per cent.Poloz has followed a cautious, data-dependent approach in recent months and he hasn't touched the rate since raising it in January, a move that came after two earlier increases in the second half of 2017.The central bank's rate decision arrives as Canada faces significant trade-related uncertainties, including stalled NAFTA talks, U.S.

Recent signals from the Bank of Canada governor, combined with strong economic data, have experts widely predicting Poloz will raise his trend-setting rate Wednesday from its current level "We expect the central bank to remain on the sideline this week , an opinion that runs counter to the market's view."

Chris Wattie/REUTERS. After waiting for half a year, Stephen Poloz appears ready to get back on his rate -hiking path this week . Recent signals from the Bank of Canada governor, combined with strong economic data, have experts widely predicting Poloz will raise his

a close up of a building© Provided by thecanadianpress.com

OTTAWA - After waiting for half a year, Stephen Poloz appears ready to get back on his rate-hiking path this week.

Recent signals from the Bank of Canada governor, combined with strong economic data, have experts widely predicting Poloz will raise his trend-setting rate Wednesday from its current level of 1.25 per cent.

Citing a prudent, data-dependent approach, Poloz hasn't touched the rate since he increased it in January, a move that followed increases last year in September and July.

Another hike this week would come with Canada facing a number of trade-related uncertainties, including NAFTA talks, U.S. steel and aluminum tariffs and the threat of more duties on the economically critical automotive sector.

Bank of Canada expected to resume tightening key interest rate Wednesday

  Bank of Canada expected to resume tightening key interest rate Wednesday The Bank of Canada is widely expected to boost a key interest rate on Wednesday as it resumes efforts to "wean" the economy off low borrowing costs. The bank's target for the overnight rate — what major financial institutions charge each other for one-day loans —   has been at 1.25 per cent since mid-January. Since then, the bank has stood firm on three subsequent rate announcements. That string is generally expected to end this week. As of Tuesday, the implied probability of a rate hike to 1.5 per cent stood at just over 96 per cent, according to Bloomberg.

The Federal Reserve's meeting of the Federal Open Market Committee (FOMC) is set to take place on Tuesday and Wednesday of this week , with the central bank widely expected to raise interest rates upon the meeting's conclusion.

The Federal Reserve on Wednesday raised its benchmark interest rate , as was widely expected . The central bank's Federal Open Market Committee voted after a two-day meeting to increase the federal funds rate by 25 basis points, to a range of 1.25% to 1.50%.

But even with such unknowns, TD chief economist Beata Caranci said she expects Poloz to work with the positive data he has in front of him.

Experts have been pointing to the many healthy numbers of late, such as the Bank of Canada's own survey on business sentiment, tightened job markets and growth in wages.

"The data has not disappointed," Caranci said Monday in an interview.

If the trade dispute deteriorates further, resulting in something as damaging to the economy as auto tariffs, hiking the interest rate now would also give Poloz more flexibility to lower it down the road, if necessary.

With the economy operating close to full capacity, waiting too long to start raising the benchmark runs the risk the central bank would have to introduce increases more aggressively, Caranci said.

Bank of Canada expected to resume tightening key interest rate Wednesday

  Bank of Canada expected to resume tightening key interest rate Wednesday The Bank of Canada is widely expected to boost a key interest rate on Wednesday as it resumes efforts to "wean" the economy off low borrowing costs. The bank's target for the overnight rate — what major financial institutions charge each other for one-day loans —   has been at 1.25 per cent since mid-January. Since then, the bank has stood firm on three subsequent rate announcements.That string is generally expected to end this week. As of Tuesday, the implied probability of a rate hike to 1.5 per cent stood at just over 96 per cent, according to Bloomberg.

The Bank of Canada, led by governor Stephen Poloz , is widely expected to keep its benchmark interest rate right where it is on Wednesday. Judging by trading in financial instruments known as interest rate swaps, investors think there's less than a one in five chance of the bank raising its target

Stephen Poloz can’t hold off raising interest rates any longer. Odds of rate increase this week top 80% despite trade tension. But central banker expected to move gradually after that.

"They want to do this in a very measured and telegraphed way, so that businesses and individuals can prepare accordingly," she said of the bank's rate-raising trajectory.

Aside from the U.S. trade threat, there isn't much to keep the Bank of Canada on hold, added Brett House, deputy chief economist for Scotiabank Economics.

And when it comes to the trade risks, House said the central bank has likely been reassured by the positive performances of key economic indicators over the last six months, notwithstanding the intense uncertainty surrounding the Canada-U.S. relationship and the volatility that comes with it.

It was reasonable to think at the beginning of the year that the unknowns surrounding NAFTA talks could pause business investment and lead to a decline in activity, he said. Instead, the numbers have pointed to healthier sentiment and very strong investment over the first six months of 2018.

Banks raise prime rate to 3.7 per cent

  Banks raise prime rate to 3.7 per cent Banks raise prime rate to 3.7 per centRoyal Bank, TD Canada Trust, BMO, and Scotiabank all say they will increase their prime rate by a quarter of a percentage point to 3.70 per cent, effective Thursday.

The Bank of Canada, led by governor Stephen Poloz , has hiked its benchmark lending rate to 1.25 per cent. The central bank was widely expected to raise its rate after data in recent months showed gross domestic product growing, the job market healthy and the cost of living ticking higher.

Poloz is trying to fine-tune a return of interest rates to more normal levels, hoping to raise them just enough to prevent inflation from creeping up, and not so quick as to trigger a slowdown. Poloz maintained his sanguine view of inflation. Even with price gains expected to rise in coming months

"You could call it holding off or you could call it following through on exactly what they said about being data-dependent, being cautious," said House, who said he expects Poloz to hike the rate Wednesday and then again once more this year, as well as another three times next year.

But while expectations are high that Poloz will raise the rate this week, a smaller group of experts believes the ongoing trade uncertainty will be enough to keep the bank in a holding pattern for now.

Higher inflation figures are a signal Poloz has a green light to hike the rate, but trade developments since the central bank's last meeting — including stalled NAFTA talks and a possible trade war between the U.S. and China — will be enough to give Poloz pause, the National Bank of Canada wrote in a recent note.

"We expect the central bank to remain on the sideline this week, an opinion that runs counter to the market's view."

Other experts argue that in the current context there's no real link between monetary policy and Canada's ongoing trade uncertainties.

While trade unknowns are very disruptive for key areas like investment, McGill University professor Christopher Ragan said interest rates are already very low and that keeping them low offers little for companies facing uncertain futures.

"I'm concerned that amidst all this uncertainty we're using that as an excuse to keep rates low," said Ragan, director of McGill's Max Bell School of Public Policy.

"Do you really believe that firms' investment will decline if rates go up 25 basis points? I don't believe that. I think the investment will rise or fall in this environment because of changes in uncertainty, but it's got almost nothing to do with interest rates."

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Key steps to getting out of credit card debt .
Key steps to getting out of credit card debtCredit cards often carry interest rates in the double digits, some of the most crippling in the debt world, so anyone carrying a balance on one should make it their top priority to pay off — even if the big banks' decision to raise their prime rates doesn't directly impact credit card rates, said Credit Counselling Society president Scott Hannah.

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