Newspaper article The Canadian Press

Don't Look for Bank of Canada to Raise Interest Rates until 2016: Scotiabank

Newspaper article The Canadian Press

Don't Look for Bank of Canada to Raise Interest Rates until 2016: Scotiabank

Article excerpt

Interest rates may stay low till 2016

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OTTAWA - The Bank of Canada won't pronounce on interests rates until later this month, but Scotiabank economists are jumping the gun in speculating Canadians won't have anything to worry about until 2016.

The economists say remarks by the central bank's senior deputy governor earlier this week suggest the bank's view is now that the economy's spare capacity may remain into sometime in 2016.

Even then, the economists argue the economy is unlikely to overshoot into excess demand, so there would be no hurry for the bank to raise rates.

Most analysts see the bank keeping its policy rate at one per cent -- where it's been for three years -- until sometime late in 2014 or early 2015, but few believe it will stay at such stimulative level for another two or three years.

On Tuesday, the central bank's Tiff Macklem said the economy needs to grow by more than 2.5 per cent annually to start closing the output gap, a key measure of whether the economy is performing up to potential. …

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