The Bank of Canada will be making its latest interest rate decision Wednesday with the likelihood of a hold-steady.
But with the announcement comes the Monetary Policy Report and the mortgage and real estate industries – along with the markets and borrowers – will be paying close attention to the language used.
Will there be a hint of what’s to come?
CIBC economist Avery Shenfeld says that deciding on what to do with rates is the easy part; deciding what to say – or not – about the future is trickier.
He says that there has not been enough solid evidence for rate rises even before the recent oil price decline.
Shenfeld says that although the bank’s outlook will make assumptions of oil prices remaining static, it will likely expect that they will firm up gradually, allowing for rate increases.
In conclusion, he believes that the tone of the BoC’s message this week will be “we’ll get back to you later” but that, assuming oil prices have rebounded and inventories are not bloated, there could be an interest rate rise as early as April.
The other big data release this week is housing starts.
Shenfeld and the CIBC Economics team expect that December’s stats will remain subdued due to the impact of regulatory changes and higher interest rates.
Despite a better-than-expected reading in November, they are calling for the pace of starts to be 206,000 when Statistics Canada releases the data Wednesday.