Bank of Canada poised to raise interest rates [View All]

[CHIMO]

Mark Carney is likely to raise borrowing costs for the second straight time Tuesday, while continuing to sound a cautious tone as belt-tightening in Europe, efforts to restrain China’s growth, and plunging consumer confidence in the U.S. cast a pall over Canada’s prospects.

All 12 primary securities dealers and most economists say the central-bank governor will lift his main interest rate by another 25 basis points, to 0.75 per cent. The labour market has recouped most of the jobs lost during the recession and companies are seeing better demand, suggesting the private sector will be able to lead economic growth after federal and provincial stimulus largesse runs out later this year.

Investors are less confident about later decisions, and that may not change this week because Mr. Carney is likely to reiterate that his path to a more neutral, pre-crisis policy stance depends on the developing economic stories around the world.

An initial clue to his thinking will come Tuesday in the statement on his rate decision, which will include highlights from a comprehensive forecast that he’ll release Thursday. Those forecasts could point to a slower, more grinding recovery both here and abroad, economists say.
http://www.theglobeandmail.com/report-on-business/economy/bank-of-canada-poised-to-raise-interest-rates/article1644190/