Imperial Bank of Canada: Bank of Canada will keep

Aihuicha, October 25: Imperial Commercial Bank of Canada said it expected the Bank of Canada to keep its overnight interest rate unchanged at 5%. The statement will cite extensive evidence that interest rate hikes so far have dampened economic growth. We disagree with the central bank's concern that inflation may become sticky in a clear economic slowdown. This is because the transition from a tight economy to a surplus capacity is expected to take some time to see a decline in price pressures related to domestic demand. However, we feel that these concerns, as well as the lack of downward momentum in key core inflation indicators that may be mentioned in the statement, will keep the central bank on a somewhat hawkish tone. If progress on the 2 percent inflation target is not seen in the coming months, the statement will open the door to further interest rate hikes.