BoC expected to maintain interest rates in September

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Bank of Canada Governor Stephen Poloz may just decide against raising interest rates in a couple of weeks.

At a Federal Reserve Bank of Kansas City’s annual central banking retreat in Jackson Hole, Wyo., he said he wasn’t worried about inflation, despite the consumer price index jumped to the outer limit of the Bank of Canada’s comfort zone in July.

Canadian policy makers had expected that inflation would creep up three per cent.

The Bank of Canada’s latest economic outlook predicts inflation of only 2.5 per cent in the third and fourth quarters before cooling early next year.

The Bank of Canada raises and lowers interest rates to keep the CPI advancing at an annual rate of about two per cent. Policy makers can live with inflation that hovers above one per cent and stays below three per cent.

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The Bank of Canada will make its next interest-rate decision on September 5. Most think policy makers will opt to leave borrowing costs unchanged.

Economists at Bank of Nova Scotia have been making a spirited case for an increase next month, arguing that a benchmark rate of 1.5 per cent is too low for an economy that’s probably growing at an annual rate of around three per cent. -CINEWS

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