Bank of Canada seen raising rates after upbeat survey

  1/8/2018 |   SHARE
Posted in Mortgages and Real Estate by Forest Hill Real Estate CENTRAL| Back to Main Blog Page

Stephen Poloz Bank of Canada

Expectations of a tightening labour market in 2018 is helping fuel speculation that the Bank of Canada will raise its overnight interest rate later this month, a belief that has rapidly gained traction following a better-than-expected jobs report last week.

In its Business Outlook Survey released Monday, the bank found that businesses plan to expand their operations and boost investment over the next year, even as they expect increased labour shortages and capacity pressures.

Analysts say the survey results appear to restrict options for Bank of Canada Governor Stephen Poloz, who has assumed a decidedly more data-driven approach to future rate decisions. The survey shows Canada’s labour pool tightening, just days after it released a jobs report that some economists called “spectacular.” The bank had repeatedly said that still-low wage growth was one of the major factors that could postpone higher interest rates.

“It’s hard to actually see them not hiking,” said Avery Shenfeld, the senior economist for CIBC Capital Markets. “They would have to have a twisted logic.”

According to the survey, 46 per cent of respondents expect more intense labour shortages in 2018 compared with last year, while only 11 per cent see less intense shortages.

That comes after Canada posted 78,600 new jobs in December, while unemployment fell to an historic low of 5.7 per cent. 

Bank of Canada, Bank of Canada Benchmark Rate, Mortgage Consumers, Variable Rate Mortgages