Slow growth cools talk of rate hikes - MoneySense

Slow growth cools talk of rate hikes

Rates unlikely to change until mid-2011: analysts.


A new Statistics Canada report outlining a stalling Canadian economy has analysts predicting that increases to interest rates will be shelved for the time being.

StatsCan reports that the country’s gross domestic product by industry grew by only 0.2% from September, dragged down by the flagging manufacturing sector and weak construction industry numbers.

In this environment, raising interest rates in order to reign in excessive borrowing—as recently hinted at by Bank of Canada Governor Mark Carney—might serve only to nudge the economy back into recession. For this reason, analysts expect rates to remain where they are until the second quarter of 2011.