The American bank is the latest forecaster to take a stab on Canada’s economy due to the recent impact of plunging oil prices. The bank has now pushed its forecast for the first rate hike to 2017, and mentions it believes other forecasters will soon follow with this prediction.
Until Tuesday, economists have mostly expected the first rate increase in late 2015, but recent comments by Bank of Canada Deputy Governor, Timothy Lane, has led many to reconsider. Some lenders have also adjusted their forecasts and are expecting the first rate hike to occur in 2016.
Oil prices have fallen by approximately 60% since June, and is taking its toll on economies that depend on commodities exports. Weaker growth will be driven by further cuts to spending and production in the energy sector. The bank also forecasts that the economic growth in Canada will only be 1.8%, opposing the Bank of Canada’s outlook, which saw the economy gaining 2.5% in 2015.