On February 9, 2017, the Bank of Canada’s Deputy Governor, Lawrence Schembri said that the Canadian official interest rates are already significantly low. Lawrence added that the low-interest rates are incapable of stimulating growth and bridging the output gap by mid-2018. While delivering a speech on an inflationary measure to a university audience, Lawrence pointed out that there is nothing complicated about the policymakers agreeing to set official interest rates.
This remark sent indications that there is little dispute considering the fact that the Bank of Canada has consistently maintained its rates. In a question and answer session that Lawrence participated in, he said that the interest rate the bank has set would sufficiently stimulate growth, help to close the output gap, and most importantly, it will allow the firm to attain its inflation goal by mid next year.
Fast forward to today, the Bank of Canada is expected to announce its decision regarding its latest interest rates. The major announcement is expected to take place at around 10.am Eastern Time, according to Business Insider. The last interest rate decision made by the Bank of Canada was made exactly two days before the current president of the US, Donald J. Trump took office.
At that time, the bank upheld the initial rates and noted – in the accompanying policy statement – that the uncertainty surrounding the global outlook had decreased especially with regard to the US. During his campaigns, Trump had shown tremendous support to the protectionist agenda and even expressed his intentions to renegotiate the NAFTA. It would be safe to speculate that the Bank of Canada left the interest rates unchanged as they wait to see what the president would do immediately he was sworn into office.
Economists and the Bloomberg World Interest Rate see no chances of the Bank of Canada raising the interest rates.