24 Oct No Rate Hikes Before Q3 2012: Reuters Poll

Thursday, 20 October 2011 09:07 Newsroom

It seems that the time limited offer for low-interest rates is likely to be extended- this according to a recent Reuters survey of 40 economists and strategists.

Respondents indicated that they do not believe that the Bank of Canada will hike rates rate before well into next year- Q3, to be exact, citing lingering and deep effects from the economic trouble that is growing in the Eurozone, and the likely slowness of a recovery there as the main drivers behind their predictions.

In August, the group had predicted a rate hike in Q2 2012, but apparently global economic trouble has escalated, and decisive action is not happening as quickly to stem the bleeding as many would like.

While it is widely felt that the Canadian Economy itself is generally healthy enough to sustain itself, it is now also widely felt that the strong economic headwinds coming from different corners of the globe are strong and significant enough to compel the Bank of Canada to stay put for an extended period of time- or even possibly cut rates further.

Also, forecasts for interest rates dropped in the latest poll, from a median target of 1.5 %from 1.75 % in the August poll.

Of the 35 forecasters that participated in both polls, 26 downgraded their forecast in one or more quarter and seven downgraded their forecasts for all five of the quarters forecast. Only two upgraded their forecast.

95% of respondents indicate that rates will hold at the next interest rate announcement, slated for October 25.

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