Canadian think tank: The Central Bank of Canada will keep Intrerest Rate above the neutral level this year

William Robson, president of the CD Howe Institute, a Canadian think tank, said a few days ago that even in an optimistic scenario, the Central Bank of Canada is expected to maintain Intrerest Rate well above the neutral level this year. Robson said Central Bank Governor McLem is likely to cut interest rates twice between March and July, so the previous rate hike has made some progress in cooling the housing market and goods and services prices. No one in the think tank believes that the Central Bank should cut Intrerest Rate to the 2%-3% range expected by the Central Bank in the coming year, with the median being to cut the Intrerest Rate to 3.75% a year later. Robson said the Central Bank risks inflation hovering above its 2% target, but more importantly, a quick or sharp rate cut would damage the public’s credibility. He added that economists are seeing plenty of evidence that GDP per capita is declining and inflation beyond mortgage intrerest rates is being subdued, but the public may only see a policy shift toward easing and price increases still appear to be dangerously high.