Trade Uncertainty Cools Interest Rate Hikes Expectations

The Bank of Canada may not raise interest rates as high as expected due to concerns over trade uncertainty and slowing immigration levels. According to Capital Economics, these risks could limit inflation in the near-term, despite rising oil prices stoking fears of persistent inflation.

Financial markets have been shifting towards favoring interest rate hikes, but economists at Capital Economics argue that the central bank will not raise its benchmark interest rate beyond 2.25 per cent in the months ahead.

The Bank of Canada has been holding off on raising rates as it assesses the impact of the US trade dispute and war in Iran on its outlook.