Bank of Canada now seen raising rates in Q4
By Solarina Ho
TORONTO (Reuters) - The Bank of Canada will raise interest rates sometime in the fourth quarter as a sturdy, if unspectacular, domestic recovery offsets global headwinds, according to a Reuters survey.
The median forecast of a July Reuters poll of 37 economists and strategists pushed back previous rate hike forecasts of a third-quarter increase projected in a May poll.
The central bank is now seen holding its key policy rate at 1 percent in the third quarter.
Of those still expecting a third-quarter increase, all of them predicted a 25 basis point rise in September. None expect a hike next week at the central bank's July 19 rate decision.
The poll was conducted between July 8 and July 12.
While some recent Canadian economic data has been encouraging, it comes against a bleak global backdrop. Worries have spread about the euro zone debt crisis and there are signs of a stagnating recovery in the United States, Canada's largest trading partner.
U.S. job growth is a key focus, since its impact on U.S. consumer spending spills into the Canadian market.
"The soft patch that we obviously have in the U.S. right now we believe will prove temporary, that we'll get a little bit of a lift in the second half of the year," said Michael Gregory, senior economist with BMO Capital Markets. Continued...