TORONTO: Most of Canada's primary dealers still expect the Bank of Canada to hold off raising interest rate until late next year or 2014 after Governor Mark Carney said the case for raising interest rates was less imminent, a Reuters poll showed on Wednesday.
The poll of Canada's 12 primary dealers, the institutions that deal directly with the Bank of Canada as it carries out monetary policy, showed the median forecast for the next rate hike was the fourth quarter of 2013.
This was unchanged from a Reuters poll published Oct. 18.
The survey was taken after the Bank of Canada's Monetary Policy Report and following a news conference in which Carney said, "the case for adjustment of interest rates has become less imminent."
The bank has been signaling since April that it will eventually raise its main policy rate, making it the only central bank among major industrialized economies to lean toward a rate hike.
But a speech by Carney last week was widely seen as less hawkish than before.
The bank did soften its tone on Tuesday, but not by as much as the market had expected. And some concluded that it was perhaps even more hawkish than before.
"(The Bank of Canada) committed a bit of a disservice to the markets through mixed communications in the past nine days. But I think in netting through those communications, they are signaling greater concern about household sector momentum," said Derek Holt, vice president of economics at Scotiabank.
Carney's comment on Wednesday appeared to be aimed at clearing up the confusion.
"The market has been whipsawed by the conflicting messages from the Bank of Canada," said David Tulk, chief Canada macro strategist at TD Securities.
"At the end of the day, the bank remains focused on walking the fine line between managing the downside risks posed by an uncertain global outlook and reminding Canadians that borrowing rates will eventually move higher."
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