Trade Uncertainty May Curb Bank of Canada Rate Hikes

According to a report from Capital Economics, the Bank of Canada's benchmark interest rate may not rise as high as expected due to trade uncertainty and slowing immigration levels. The report argues that these risks will limit inflationary pressures, requiring less monetary policy tightening. The Bank of Canada has maintained its benchmark interest rate at 2.25% since last October while it assesses the impact of the US trade dispute and war in Iran on its outlook.

The central bank will soon release updated forecasts for inflation and economic growth. Capital Economics suggests that these projections will be more conservative, reflecting the potential headwinds facing Canada's economy.