Economists widely believe that based on the economic environment, it's likely that governor Stephen Poloz will raise the central bank's benchmark interest rate today for a third time since last summer.
The Bank of Canada has raised interest rates by a quarter per cent, up to 1.25 per cent, which will likely have an impact on people with variable rate mortgages.
The central bank's tone, however, was more dovish than many economists were expecting.
The Fire & Police Pension Association of Colorado filed the claim against BMO, Bank of Nova Scotia, CIBC, National Bank of Canada, Royal Bank of Canada, TD and three others at the United States District Court for the Southern District of NY on Friday.
As of Thursday, Jan. 18, all five now have the same prime lending rate of 3.45 per cent. In June the following year, it raised the rates to 0.75% and in the next meeting, they raised to 1%.
That came after regulators worldwide began accusing, and eventually fined, many banks for manipulating the London Interbank Offered Rate and other benchmarks.
In the MPR, the bank nudged up its expectations for how the economy will perform this year and next. The bank expects exports to get a 1 percent boost by the end of 2019 due to the tax reforms.More news: Stricken tanker leaves large oil slick in East China Sea
The USD/CAD rate was quoted 0.51% higher at 1.2484 immediately after the announcement while the Pound-to-Canadian-Dollar rate was marked 0.51% higher at 1.7236. "However, the uncertainty surrounding the future of Nafta is clouding the economic outlook". Trade flows are potentially at risk as the U.S., Canada and Mexico renegotiate Nafta at the behest of the Trump administration.
"At this stage, it is hard to predict the possible outcomes of trade negotiations and the timing, incidence and magnitude of their effects", the bank said in its MPR, which mentions NAFTA concerns nine times in the 21-page document. The bank pointed out that roughly half of Canada's exports to the United States benefited from preferential NAFTA tariffs in 2016. It raised rates in July and September of a year ago, both by quarter percentage points. Visit MarketWatch.com for more information on this news. The Bank's outlook takes into account a small benefit to Canada's economy from stronger United States demand arising from recent tax changes. Governing Council will remain cautious in considering future policy adjustments, guided by incoming data in assessing the economy's sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.
Responding to the first of the three recent rate increases, local mortgage expert Dustan Woodhouse said, "It's not about the interest rate, that shouldn't concern you - it's about the effect that interest rate rise will have on the payment you make on your mortgage".
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