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For Poloz’s Rate Decision, Household Debt and Fed Are Front and Centre

Posted January 15, 2018

Under Economic Issues, International Trade Issues

(Theophilos Argitis – Bloomberg News)

The Bank of Canada is already well into the process of raising interest rates to more normal levels and another increase is expected on Wednesday, after the economy’s stellar performance last year.

The big questions are how quickly do they continue moving up from here, how closely will they follow U.S. increases and where will rates settle. Markets are pricing in at least three more increases this year, which would bring the benchmark rate to 1.75 per cent.

Canada’s economy, swept up by a synchronized global expansion, a housing boom and recovering oil prices, had a banner 2017 that included a sharp drop in unemployment and output growth that beat expectations. Policy makers now worry the economy could soon overheat, triggering inflation. Which is why they raised borrowing costs twice last year. Click here to read more.