An interest rate cut still on the cards later this year

We expect the Bank of Canada to hold interest rates at 0.50% next week and maintain a neutral outlook for future policy changes. Despite stronger economic growth at the start of the year and the rebound in oil prices, forward looking indicators on business investment and hiring still point to sluggish growth this year. The Bank hopes that fiscal stimulus will provide a lift to the economy, but we doubt the Federal government’s infrastructure plans will make much of a difference in the near term. Accordingly, we still expect the Bank to cut interest rates later this year.