Should be of no surprise to anyone who follows real people working in the real economy where our growth has been a mirage rather than those who think it acts as a metronome and can be propelled by over reliance on the resource sector and household indebtedness.
Don’t look for another interest rate hike for two more years; in fact, there is a one in three chance the Bank of Canada will actually cut rates before the end of this year, Morgan Stanley predicts.
The latest forecaster to take a stab at the impact of plunging oil prices on Canada’s economy, the American bank stands out for its bearish take.
The bank not only pushed its forecast for the first rate hike to 2017, it predicted others would soon follow suit.
“The fall in oil is undisputedly negative for Canada’s economy,” the bank wrote in its report Wednesday “Canada Outlook: Sands through the hourglass.”
“Rate differentials should continue to move against Canada, if, as we expect, the market pushes out expectations for tightening from the Bank of Canada into 2017, reflecting a later closing of the output gap.”
Until Tuesday, most economists have expected a rate increase…
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