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Bank of Canada Governor Stephen Poloz listens to remarks after addressing the Canadian Club of Toronto on Dec. 14, 2017.

Good morning,

The Bank of Canada is set to make its first interest rate decision of 2018 later today. Many analysts are expecting a hike in the central bank’s benchmark rate, which would be the third increase in six months. BoC Governor Stephen Poloz began unwinding years of super-low interest rates, which came about after the Great Recession, last year as the economy was firing on all cylinders. In 2017, Canada’s GDP led the G7 countries with 3-per-cent growth, and our economy saw 420,000 jobs added, pushing Canada to its lowest unemployment rate in more than 40 years in December. An increase in the Bank’s overnight rate would likely increase borrowing costs for individuals but may also end up boosting the loonie, which would increase Canadians’ purchasing power while decreasing exports. Although the central bank’s decision will give insight on where it thinks the economy is heading in 2018, what might be even more revelatory is the Monetary Policy report, which also comes out today. All signs point, however, to the Bank of Canada moving to prevent the economy from overheating by increasing interest rates, a year ahead of a federal election.

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