BoC to lay low, says economist

The Bank of Canada will make its next rate-setting decision this week.

But don’t expect any surprises, says Avery Shenfeld of CIBC World Markets in a recent report.

In the report, Shenfeld says, “The overnight rate will be left at 1%…the [BoC’s] already show[n] us…they intend to avoid sounding hawkish, despite the evident run-up in inflation.”

The bank’s dovishness, he predicts, “creates nothing in the way of a trading opportunity in yield products. A very flat Canadian yield curve already implies a very limited course of rate hikes in the next few years.”

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Regarding the Canadian dollar, Shenfeld states in the report that the BoC likely won’t “do anything [to] help sustain a stronger loonie.” However, he says he’s “sympathetic to that strategy [since] exports still aren’t showing enough momentum to supplant homebuilding as a source of growth.”

To hear more from Shenfeld and other economists, click here.

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Slow economy holds back manufacturing

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