UBS Sees Bank of Canada Sitting Tight on Interest Rates

UBS Global Research is predicting that the Bank of Canada will keep interest rates unchanged through this year, despite the country's economy showing a strong 3.3% annualized growth in the second quarter.

This forecast comes from a note dated Sunday by UBS, which suggests that lingering US trade tensions could still complicate Canada's inflation outlook.

The Bank of Canada is likely to keep its policy rate at 2.25%, according to UBS, and it won't rise to 2.75% until the end of next year.

This means that borrowing costs will remain steady in the near term for variable-rate borrowers, but those renewing or refinancing loans may see higher costs as lenders build in expected future funding costs.