[ad_1]
After James Smith, Economist, Developed Markets
According to Nafta negotiations over the next few months, it appears that the Bank of Canada could track the rate hike before the end of the year. the year
As expected, the Bank of Canada resumed its tightening cycle on Wednesday with its first rate hike since January. But the big question at the meeting was how politicians would see the recent surge in trade tensions.
Well, although the statement is littered with references to tariffs, the word "trade" appears six times at least. The message seems to be cautious optimism. Interestingly, he expects the impact of steel and aluminum tariffs to be "modest" and still expect an average growth of 2% over the next two years. He also remains quite optimistic about the investment, despite trade concerns "in some areas".
At this point, we expect a further rate hike in the fourth quarter, although any break in NAFTA negotiations, or the implementation of new rates, could easily change that. While most of the underlying inflation measures are now in the range of 2%, we suspect that the Bank of Canada could hit again later this year – although it's clear that it depends on the Nafta talks.
It seems that the talks could extend beyond the mid-term US elections in November. This would mean a longer period of uncertainty for Canadian businesses. But on the other hand, as long as the actual trade situation remains unchanged, Canada will continue to reap the benefits of an exceptionally strong US economy.
Disclaimer: The information contained in the publication is not a recommendation for investment and it is not an investment advice legal or fiscal or an offer or solicitation to buy or sell a financial instrument. This publication has been prepared by ING for informational purposes only, without regard to the investment objectives, the financial situation or the means of a particular user. Reasonable precautions have been taken to ensure that this publication is not false or misleading when it is published. For our full warning, please click here
Original Post
[ad_2]
Source link
