Interest rates likely to remain low for years

The Bank of Canada policy announcement next week, which almost surely will maintain the policy interest rate at 1%, is likely to acknowledge that the more modest outlook for the global economy has prompted downgrades to Canada's economic prospects. Nevertheless, the bank's June stance that “some modest withdrawal of the present considerable monetary policy stimulus may become appropriate” is likely to be kept for the time being, but we expect this hawkish bias to be removed before year end.