November 25, 2014 / 6:49 PM / in 4 years

OECD sees Bank of Canada rate hikes starting in May

OTTAWA, Nov 25 (Reuters) - The OECD projected on Tuesday a rate hike by the Bank of Canada in May 2015, months earlier than most market economists expect.

The Paris-based Organization for Economic Cooperation and Development recommended that the central bank keep its policy rate where it is for the time being because of the uncertainty surrounding the amount of economic slack.

“But it will have to start to withdraw stimulus as remaining slack is progressively taken up,” it said in its economic outlook.

“The timing and pace will depend on economic developments, but it is assumed in this projection that the first policy rate increase occurs in late May of 2015 and that the rate rises steadily thereafter.”

The next rate decision for the bank, which last hiked rates in September 2010, is on Dec. 3. Economists unanimously expect the bank to stay on hold, and most do not see a rate change until well into the second half of the year.

Editing by Tom Brown

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