Bank of Canada on hold for rest of this year

The Bank of Canada’s decision to hold interest rates at 1.00% and its less hawkish policy statement indicate it will take a cautious approach, supporting our view that there will be no further rate hikes this year. Next year, however, we expect the knock-on effects from a worsening housing downturn to slow the economy and to force the Bank to reverse course. After ending this year at 1.00%, we expect interest rates to be cut to 0.50% in 2018.