Bank of Canada: Energy risks complicate October decision - RBC
Rachel Battaglia at Royal Bank of Canada (RBC) argues that higher backward-looking population growth implies stronger potential output, mechanically reducing pressure on the Bank of Canada (BoC) to hike rates.
The Bank of Canada (BoC) is grappling with the complexities of an October policy decision, as higher population growth estimates complicate the situation. Royal Bank of Canada (RBC)'s Rachel Battaglia contends that an upward revision in population growth implies a stronger potential output, which would, in theory, lessen the pressure on the central bank to raise interest rates.
However, the BoC is now placing more emphasis on energy price risks, which presents a challenge for policymakers. Despite the fact that key slack indicators like unemployment and business surveys have remained unaltered by demographic revisions, the October meeting continues to be a difficult decision for the BoC.
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