Jan. 31 (Bloomberg) -- Bank of Nova Scotia and Toronto-Dominion Bank economists today pushed back their predictions for an increase in the central bank’s 1 percent policy rate, citing weaker economic growth prospects.
Scotiabank vice-president of economics Derek Holt today moved his rate-increase prediction to “early” in 2015 from a prior forecast of the first quarter of next year. TD Securities economists including David Tulk moved their prediction to January 2014 from October of this year.
The benchmark overnight rate has been unchanged since September 2010 in the longest pause since the 1950s as weak global demand curbs exports. Governor Mark Carney, who leaves June 1 to lead the Bank of England a month later, said Jan. 23 the case for an increase is “less imminent” while cutting his 2013 growth forecast to 2 percent from 2.3 percent.
“We have greater conviction that Canadian growth is going to underperform U.S. growth and the bank’s forecast,” Holt said in a telephone interview. The U.S. Federal Reserve may keep rates unchanged until mid-2015 and it would be “exceptionally difficult for the Bank of Canada” to raise borrowing costs much sooner, Holt said.
Statistics Canada said today that the economy grew 0.3 percent in November. That combined with a 0.1 percent October expansion suggests fourth-quarter growth may be about 1 percent at annualized rates, according to Robert Kavcic, a Bank of Montreal economist.
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