OTTAWA (Reuters) - The Canada Mortgage and Housing Corp’s (CMHC) prediction that central bank interest rates will stay on hold this year is based on external forecasters and not any special guidance from the Bank of Canada, the agency said on Tuesday.
Spokesman Charles Sauriol said the rate forecast was written in late 2011, reflecting the outlook at the time, and was therefore many months old.
In its annual report, CMHC said that the Bank of Canada has indicated it is likely to keep its key interest rate at 1.0 percent for 2012, triggering a reaction in financial markets which have priced in a good chance of a rate hike this year.
“No, we don’t have specific guidance from the Bank of Canada. We’re not in the inner circle of monetary policy,” CMHC’s deputy chief economist Mathieu Laberge told reporters on a conference call.
“What I can tell you though is that when you look at what is forecast now, we do expect the target for the overnight rate to remain at around 1 pct for most of 2012. Some forecasters do expect a small, gradual increase at the end of year, but not before the fourth quarter, or in some cases before December.”
Reporting By Randall Palmer and Louise Egan; Editing by Jeffrey Hodgson and Janet Guttsman