- REUTERS/Chris Wattie
- The Bank of Canada is expected to hold its key rate steady at 1.5% on Wednesday.
- The central bank has emphasized taking a gradual approach to raising rates.
- The decision comes just as the trade officials restart talks on NAFTA, which President Donald Trump has threatened to exclude Canada from.
- Watch the Canadian dollar trade in real time here.
The Bank of Canada is expected to hold rates steady at a policy meeting Wednesday as trade uncertainty threatens to dampen growth.
All but one of 31 economists polled by Reuters expect the central bank, which has emphasized a gradual approach to monetary policy, to leave its target for the overnight rate unchanged at 1.5%. It last raised its benchmark interest rate in July by a quarter percentage point, marking the fourth hike since last summer.
Stephen Brown, a senior economist at Capital Economics, noted a humming economy could embolden policymakers.Canada’s economic growth accelerated in the second quarter at the fastest pace in a year, the national statistics agency said last week, driven by a sharp increase in exports and consumer spending.
“With the data surprising to the upside in recent months, Governor Stephen Poloz seems ready to act soon,” Brown said.
But at its last policy meeting, the BOC expressed concern about ongoing trade tensions between Canada and the US. President Donald Trump recently threatened to exclude Canada from a final NAFTA agreement and to impose tariffs on Canadian car imports to the US.
Negotiations are expected to restart in Washington on Wednesday, just after a US Commerce Department report showed the trade deficit with Canada jumped in July by about 58% to $3.1 billion. The trade deficit, which measures the difference between what the US buys and sells abroad, has been a source of frustration for Trump.
The Canadian dollar edged higher against the US dollar ahead of the rate decision.