Forecasts come after jobs report surprises to the downside
The Bank of Nova Scotia and the Bank of Montral have both changed their forecast for the upcoming Bank of Canada interest rate decision set to be announced on September 17. Both lenders now predict that Governor Tiff Macklem will announce a cut of 25 basis points, bringing the policy rate to 2.5 per cent.
Economists at RBC continue to expect that the BoC will keep rates where they currently are.
The revision comes after a disappointing jobs print for August was released on Friday morning. The Canadian economy lost 22,000 jobs overall and unemployment rose to over seven per cent.
Canadian bonds rallied following the release of those jobs numbers as bond investors placed bets on the BoC cutting interest rates later this month. Other data seem to support a rate cut, as Q2 GDP growth was also recently announced as negative, contracting at a 1.6 per cent annualized pace.
Scotiabank now predicts that the BoC will cut in September as well as at its next decision scheduled for late October. They predict a 25 basis point cut from each decision.
