- REUTERS/Chris Wattie
- The Bank of Canada will announce its latest interest rate decision on Wednesday.
- The central bank is expected to hold its key rate steady at 1.25%.
- That’s amid NAFTA negotiations and disappointing housing market data.
The Bank of Canada is expected to hold its key interest rate steady Wednesday morning as NAFTA negotiations look poised to drag into next year and amid concerns about a slowing housing market.
Economists widely expect the central bank to hold its key interest rate at 1.25% during the 10 a.m. ET announcement and are instead watching for signals that monetary policy could tighten at its next meeting in July. The meeting will not include a new Monetary Policy Report, which typically accompanies rate hikes.
Canada, the US, and Mexico are in gridlock on NAFTA negotiations after missing a deadline earlier this month set by US House Speaker Paul Ryan. Trade talks have continued, but some analysts doubt that reaching a new deal this year is even possible.
The rate decision also comes after disappointing housing data out earlier this month. Canadian housing starts fell last month, according to data from the Canada Mortgage and Housing Corporation, to 214,379 units from 225,459 in March. Economists had forecasted that starts would fall less sharply in April to 220,000.
“We believe that conditions revealed since the April meeting mean that the GC may wish to maintain its flexibility again at this week’s meeting,” analysts at Macquarie said. “So, we think that even a ‘soft signal’ of a July hike is not coming this week.”
The Bank of Canada has raised rates three times since last July.