- Emanuella Enenajor, senior economist for Bank of American Merrill Lynch Global Research
Hiring and investment intentions of Canadian companies declined to their lowest level since 2009, according to the Bank of Canada's survey. The central bank reported that the effects of low commodity prices spread across many sectors beyond resources. Companies paint a gloomy picture for this year, as low oil prices have posed significant challenges for many companies. Therefore, many companies cited a need to cut costs, which will lead to lower hiring intentions or even staff layoffs.
The disappointing conclusions of the survey prompted bets that the Bank of Canada will cut its trend-setting interest rate at its next scheduled policy meeting January 20. However, some economists argue that it would be a premature decision, with the effects of the BoC's two rate cuts in 2015 still working their way through the system. BoC's Governor Stephen Poloz has said recently that there are both conventional and unconventional tools at the central bank's disposal to support the Canadian economy. Among them is the BoC's ability to lower the benchmark rate into negative territory, if necessary. At the moment, the majority of experts expect Poloz to refrain from moving the rate.
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