OTTAWA — The potential federal election is good news in one sense — it likely ensures Canadians will enjoy super-low interest rates until at least the summer and possibly the fall. CIBC is already changing its mind about when the Bank of Canada will next raise rates, saying it could now come in July instead of May.
Scotiabank now thinks it won’t happen until October. There is nothing written in stone about when the Bank of Canada can raise or lower interest rates, but the custom is that the independent institution doesn’t want to appear to be playing favourites. Elections also create practical problems for central bankers.
Scotiabank economist Derek Holt notes that the central bank has tightened policy in what he calls the election period only once in the past 20 years — and that was under unusual circumstances.