Cautious outlook seen in BoC rate decision

OTTAWA The Bank of Canada will release new projections Wednesday and deliver an interest rate announcement amid a backdrop of surprisingly hearty data suggesting the economy is building momentum.

Analysts, who widely anticipate governor Stephen Poloz to leave the benchmark rate of 0.5 per cent unchanged, will sift through the commentary for insight into the bank’s thinking as it comes under increasing pressure to acknowledge the more positive economic figures.

The better-than-anticipated data in recent months has already led some experts to predict the central bank’s next rate hike will come sooner than they previously expected.

However, observers say Poloz has made a point of emphasizing the pockmarks of the Canadian economy.

“It would be odd to forget about all those downside risks just because a couple of data points came in a little bit better than expected,” Poloz said last month when asked whether the stronger numbers in areas such as growth, trade and the labour market had altered the bank’s thinking ahead of the policy decision.

“We’ve had positive data points in the last three years, too — and they didn’t last. So, we’re being very cautious in that outlook.”

Economists like Jimmy Jean of Desjardins expect Poloz to once again underline some of the weaker data points — from the numbers for non-energy exports, to hours worked, to wage growth.