OTTAWA (Reuters) - The leader of Canada’s most populous province urged the Bank of Canada on Wednesday not to raise interest rates next week, wading into territory usually deemed inappropriate for politicians.
Dalton McGuinty, the premier of Ontario, said weakness in the U.S. economy means Canada’s recovery is also wobbly, according to media reports.
“My advice to the Bank of Canada is: Just no more interest rate hikes, not at this point in time,” he is quoted as saying by the Canadian Press news service.
McGuinty spoke to reporters while visiting an elementary school in Toronto. Ontario’s manufacturing heartland has been particularly hard-hit by the global recession and fluctuations in U.S. demand for its exports.
Canada’s central bank, which is politically independent, is set to announce its decision on interest rates on September 8 in one of the closest calls in some time.
A Reuters poll of primary securities dealers shows most expect the bank to hike rates by 25 basis points to 1 percent, but market sentiment is almost evenly divided.
Those who oppose another rate hike point to a sharp slowdown in economic growth in the second quarter and fears of another downturn in the United States, Canada’s top export market.
Reporting by Claire Sibonney and Louise Egan; editing by Peter Galloway