There’s been a blip in the trendline that was bringing us lower interest rates.
With inflation numbers finally floating in the so-called target range, the Bank of Canada was able to begin the process of reducing interest rates at its setting last month. And it was a bellwether, something of an omen that another cut would follow this month.
But then came the GDP or economic growth numbers for the national economy. They showed things were heating up again, with growth exceeding the projections of many economists. And that raised the question. Will the Bank of Canada go ahead with a cut in July or will it back off and see how this plays out?
After all, they don’t want to stimulate the economy with lower rates but they also worry about all the people who are renewing mortgages. They’d like to help manage the higher payments.
While we have no consensus at this point, the betting among forecasters is that the GDP data was a blip, not a trend, and the central bank has room for another cut.
