Bank of America: Abandoning Rate Cut Forecast for the Bank of Canada Due to Rising Oil Prices

According to Golden Ten Data on March 10, Bank of America has abandoned its previous forecast that the Bank of Canada would cut interest rates twice more this year (by 25 basis points each time), citing the impact of rising energy prices on the economy. Bank of America economist Carlos Capistrán stated that it is now expected that the Bank of Canada will keep interest rates unchanged until 2026. Oil prices, driven higher by military conflicts in the Middle East, are expected to push up inflation and income in Canada. As a major oil exporter, Capistrán estimates that a sustained 10% increase in oil prices will boost Canada's GDP growth by 0.3 percentage points and CPI growth by 0.4 percentage points over the next 12 months. Capistrán said he does not expect the Bank of Canada to raise interest rates, as any price pressures will be offset by a strong appreciation of the Canadian dollar.