Bank of Canada continues to back off rate hikes

With inflation now below target and the economy operating well below its potential, it was no surprise to see the Bank of Canada back even further away from raising interest rates. We still think that the Bank is being overly optimistic in expecting GDP growth to accelerate this year. Accordingly, we eventually expect it to drop any pretence that rates may rise over the next couple of years, with the next move in interest rates more likely to be down rather than up.