Thursday, 8 Jun 2023

Bank of Canada rate cut increasingly likely amid coronavirus fears, economists say

The Bank of Canada may announce an interest rate cut at its next meeting on Wednesday, a growing number of economists say.

The central bank has kept rates steady since Oct. 24, 2018, but analysts believe its next move will likely be a cut as the economy faces a number of headwinds including the COVID-19 outbreak, dropping oil prices and transport disruptions.

RBC economists are now forecasting a cut of a quarter of a percentage point, from 1.75 per cent to 1.50 per cent, at the Wednesday meeting.

“The plunge in global equity markets and sharp drop in commodity prices, in particular oil, are bumping up the risks that the confidence hit in financial markets will be mirrored in household and business sentiment,” RBC deputy chief economist Dawn Desjardins wrote in a memo on Friday.

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