A Vancouver economist says the U.S. Federal Reserve could raise interest rates before the Bank of Canada budges from its 1% benchmark.
“We’ll see no increases in the Bank of Canada rate well into next year,” said Helmut Pastrick, chief economist at Central 1 Credit Union. “The earliest we may see it is early in 2014, and possibly it might go into early 2015.”
The Bank of Canada announced Wednesday that interest rates will remain unchanged. The rate was lowered to 1% in September 2010 as a response to Canada’s slowing economy in the midst of a global recession.
Nearly three years later, the Canadian economy continues to show only moderate growth. A slowdown in residential housing is a contributing factor, said Pastrick, as is government spending, which has started to be a “drag” on the economy.
“Once the U.S. economy kicks up into higher gear and the Asian economies as well, I think Canada will experience a pickup in exports,” he said. “That will begin to lift growth, and we’ll see the Bank of Canada raise rates.”
“It’s just a question of when.”
