Pundits change their call on rates

September 4, 2007

4 September 2007

Pundits change their call on rates

This article is excerpted from the 4 September 2007 edition of the “Toronto Star”.

The Bank of Canada is widely expected to leave its key overnight rate unchanged at 4.5 per cent at its scheduled rate announcement tomorrow – a big change from predictions less than a month ago when another hike was thought to be imminent….

The bank raised its key rate a quarter point July 10, and economists had expected another increase tomorrow and very possibly once more this year.

Since then, however, a credit squeeze traced back to the collapse of the United States subprime mortgage market has upset world trading places and prompted central banks, including the Bank of Canada, to intervene with cash infusions….

Interest rates are very much the focus of investors these days. Many hope the U.S. Federal Reserve Board will cut rates by the time of that central bank's next scheduled rate announcement Sept. 18 – at the latest – to bolster confidence and stop the mortgage-sector downturn from hurting the overall U.S. economy.

Cuts aren't considered likely in Canada. …

Meanwhile, stock markets will be looking to key economic data this week to gauge the damage done to the U.S. economy by the tightening in credit markets, which has particularly hit the liquidity of loans known as asset-backed commercial paper… .


Topic(s): 
Canadian Economy & Politics
Information Source: 
Canadian News Channel
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