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Bank of Canada Remains in ‘Wait-and-See’ Mode

May 24, 2017

The Conference Board of Canada’s Chief Economist Craig Alexander offers the following perspectives/insights:


“The subdued pace of inflation and uncertainties stemming from global and domestic risks has the Bank of Canada in wait-and-see mode. The next move in interest rates is likely upwards, but this may not come until early next year. By then, there will be a greater understanding of how the risks may play out,”
—Craig Alexander, Senior Vice-President and Chief Economist, The Conference Board of Canada.


  • The Bank of Canada left interest rates unchanged today and delivered a very neutral communiqué signaling that monetary policy will be on hold for some time. This is consistent with The Conference Board of Canada’s expectations for no tightening before next Spring and then only a modest rise in interest rates in 2018.
  • The Bank feels that the headwind from the prior commodity shock has largely abated and the strong growth in the first quarter will be followed by more moderate growth across the country. While the more regionally-balanced and continued economic expansion is healthy, the prevailing economic slack is limiting future inflation risks. Indeed, wage growth is very subdued and key inflation metrics are running below the Bank’s 2.0 percent target.
  • The Bank continues to flag risks to the outlook that were presented in the April Monetary Policy Report. The list of risks in the MPR is too numerous to enumerate. The two we would highlight are the shift toward protectionist global trade policies and the risks arising from potential imbalances in real estate valuations and rising household debt. It is worth flagging that the Bank did not comment on any risks from the troubles at Home Capital Group.
  • The limited inflation risks and the uncertainty regarding the outlook has the Bank of Canada playing a cautious game of delaying any action until more information becomes available.


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Photo of Craig Alexander Craig Alexander
Senior Vice-President and Chief Economist

Craig Alexander brings over 19 years of experience in the private sector as an economic and financial forecaster to the position of Senior Vice President and Chief Economist. He oversees the Board’s macro-economic outlook products, custom economic and tourism research.

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