The Bank of Canada is set to announce its target for the overnight rate next week, and brokers are already speculating about what it will be.
“I think they will leave it where it is because the economy has seen some improvement over the last month and a half,” Steven Gilmour, a broker with Mortgage Alliance
, told MortgageBrokerNews.ca. “August showed some improvement.”
Despite that slight economic improvement, the Canadian economy was in a recession for the first half of the year, according to StatsCan, which fueled speculation that the Bank of Canada could look to make its third rate cut of the year.
And it looks like Gilmour isn’t alone in his prediction.
A Reuters poll, released Thursday, suggests analysts foresee a 40% possibility that the central bank will make another rate cut at some point. That same poll also shows a 55% chance a rate hike will be put off for at least a year-and-a-half.
More specifically, the 40 economists who took part in the poll believe the BoC will maintain the current target of 0.5% at next week’s meeting.
"The Bank of Canada will be comfortable remaining on the sidelines," David Tulk, chief Canada
macro strategist at TD Securities, told Reuters. "There is still a risk they might cut given that the outlook has weakened. But they don't have the same urgency to respond to a weaker-than-expected performance in the economy like they did back in July."
Whatever the decision, Gilmour doesn’t expect it to have a significant effect on broker business; he does believe industry players will continue to experience steady business.
For his part, Wayne Campbell of Campbell Mortgage Brokers agrees.
“For myself, I don’t pay much attention to rates,” Campbell told MortgageBrokerNews.ca. “Whatever the decision, it won’t impact my business much.”