OTTAWA – The Bank of Canada makes its latest interest rate announcement today along with its updated forecast for the economy.
The central bank is widely expected to keep its key interest rate target on hold at 0.5 per cent, but economists and policy-makers will be scrutinizing its outlook for the economy.
The economy pulled back in the second quarter due in large part to the wildfires in Alberta that shut down production in the oilsands.
It’s expected to bounce back in the third quarter, but just how much of that momentum will be carried through into the fourth quarter is the question.
In its monetary policy report in July, the Bank of Canada predicted economic growth to rebound to a 3.5-per-cent annual pace in the third quarter due to oil production and reconstruction efforts in Alberta’s oilsands region.
Growth for 2016 as a whole was forecast at 1.3 per cent.
Bank of Montreal senior economist Benjamin Reitzes said the new monetary policy report will likely see a downgrade to economic growth for this year as the second quarter was worse than the central bank projected.
“The risk for the policy outlook remains tilted toward a cut, but the bar remains high for such a move,” Reitzes wrote in a report.
“The bank will be watching exports, housing, and the impact of fiscal stimulus closely over the coming months, with those three factors likely the keys for policy through at least mid-2017.”