Canada’s Stronger-than-expected Economic Growth Raises Chances for Rate Hike

The economy of Canada soared more than the forecast of 0.2 percent in July, which in turn increases the likelihood of a rate hike for the fifth time in more than 12 months.

Reuters survey of analyst indicates a forecast growth of 0.1 percent since June and 12 out of the 20 sectors acquired growth.

The growth figure is essential after the previous forecast expect some factors will have an impact for a short time to the gross domestic product of July quarter. Governor Stephen Poloz gave his word for a gradual rate hike and monitor closely the economic data.

Another interest rate decision is expected to be given on October 24. Meanwhile, the bank implemented rate hikes for four times since July last year as the economy becomes steadfast and close to record low of unemployment rates.

The senior Canada economist at Capital Economics, Stephen Brown, the performance of the economy still on the course towards the 2 percent target.

Furthermore, Brown added that the growth shows to be “stronger” than the 1.5 percent of the central bank of Canada which then raises stakes of another rate hike next month.

On the other hand, market expectations for the next rate increase in October can be translated base on the overnight index swaps which slightly augmented to 78.27 percent from 76.46 percent.