The Organization for Economic Co-operation and Development is recommending that the Bank of Canada raise interest rates “without delay,” triggering some dissenting opinions from Canadian economists.
The BoC, currently holding interest rates at record-low levels as a post-recession stimulus measure, is slated to announce its next rate change in less than a week. Until recently it was assumed that rates would be hiked in order to cool down the economy, but the recent European debt crisis and resulting turmoil has led Canadian economists to reconsider that assumption. Some say stimulus might still be in order, at least for a while, and the OECD’s conclusion otherwise has some wondering if the Paris-based economic institute is a little out of touch.
“I have to wonder when this recommendation was cobbled together… we do have the rumblings of what could be a serious global episode in financial markets,” BMO economist Douglas Porter told CBC News.
Nonetheless, the OECD has optimistically revised its growth forecast for Canada in the coming year, from 3.2 to 3.6%