Bank of Canada's Estimate for Neutral Rate May be Too High

Dow Jones

Jul 09

0909 ET - Canada's neutral interest rate might be a half-point lower than current Bank of Canada estimates, says economist David Watt at Rosenberg Research. Economists say the neutral rate is the level that neither stimulates nor subtracts from growth, and the BOC estimates that in Canada it sits between 2.25% to 3.25%. Watt says a population decline, two decades of flat growth in capital stock, and lingering US trade-policy uncertainty have pulled Canada's estimate for the neutral rate down by roughly 50 basis points, to between 1.75% and 2.75%. As a result, Watt says, the BOC's main interest rate is likely too high at 2.25%, and a rate increase to guard against inflation risks from higher oil prices would be an error. (Paul.Vieira@wsj.com; @paulvieira)

(END) Dow Jones Newswires

July 09, 2026 09:09 ET (13:09 GMT)

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Economists say the neutral rate is the level that neither stimulates nor subtracts from growth, and the BOC estimates that in Canada it sits between 2.25% to 3.25%. Watt says a population decline, two decades of flat growth in capital stock, and lingering US trade-policy uncertainty have pulled Canada's estimate for the neutral rate down by roughly 50 basis points, to between 1.75% and 2.75%. As a result, Watt says, the BOC's main interest rate is likely too high at 2.25%, and a rate increase to guard against inflation risks from higher oil prices would be an error. (Paul.Vieira@wsj.com; @paulvieira) \n</p>\n<p>\n  (END) Dow Jones Newswires\n</p>\n<p>\n  July 09, 2026 09:09 ET (13:09 GMT)\n</p>\n<p>\n  Copyright (c) 2026 Dow Jones &amp; Company, Inc.\n</p>\n</font>","source":null,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Bank of Canada's Estimate for Neutral Rate May be Too High</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBank of Canada's Estimate for Neutral Rate May be Too High\n</h2>\n\n<h4 class=\"meta\">\n\n\n<div class=\"head\" \">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Dow Jones </p>\n<p class=\"h-time\">2026-07-09 21:09</p>\n</div>\n\n</div>\n\n\n</h4>\n\n</header>\n<article>\n<font class=\"NormalMinus1\" face=\"Arial\">\n<p>\n     0909 ET - Canada's neutral interest rate might be a half-point lower than current Bank of Canada estimates, says economist David Watt at Rosenberg Research. Economists say the neutral rate is the level that neither stimulates nor subtracts from growth, and the BOC estimates that in Canada it sits between 2.25% to 3.25%. Watt says a population decline, two decades of flat growth in capital stock, and lingering US trade-policy uncertainty have pulled Canada's estimate for the neutral rate down by roughly 50 basis points, to between 1.75% and 2.75%. As a result, Watt says, the BOC's main interest rate is likely too high at 2.25%, and a rate increase to guard against inflation risks from higher oil prices would be an error. (Paul.Vieira@wsj.com; @paulvieira) \n</p>\n<p>\n  (END) Dow Jones Newswires\n</p>\n<p>\n  July 09, 2026 09:09 ET (13:09 GMT)\n</p>\n<p>\n  Copyright (c) 2026 Dow Jones &amp; Company, Inc.\n</p>\n</font>\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FLCA","symbol_name":"Franklin FTSE Canada ETF","start_time":0,"source_url":"https://dowjonesnews.com/newdjn/logon.aspx?AL=N","article_id":"2650922524","we_media_id":"106","thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2650922524","pubTimestamp":1783602540,"columns":[],"sourceInfo":null,"weMediaInfo":{"media_name":"Dow Jones","introduction":"Dow Jones publishes the world’s most trusted business news and financial information in a variety of media.","home_visible":0,"id":"106","head_image":"https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99"},"summary":"0909 ET - Canada's neutral interest rate might be a half-point lower than current Bank of Canada estimates, says economist David Watt at Rosenberg Research. Economists say the neutral rate is the level that neither stimulates nor subtracts from growth, and the BOC estimates that in Canada it sits between 2.25% to 3.25%. Watt says a population decline, two decades of flat growth in capital stock, and lingering US trade-policy uncertainty have pulled Canada's estimate for the neutral rate down by roughly 50 basis points, to between 1.75% and 2.75%. As a result, Watt says, the BOC's main interest rate is likely too high at 2.25%, and a rate increase to guard against inflation risks from higher oil prices would be an error.  Dow Jones NewswiresJuly 09, 2026 09:09 ET Copyright  2026 Dow Jones & Company, Inc.","collect":0,"end_time":0,"defaultTopTitle":"","property":["rate"],"viewcount":null,"language":"en","relate_stocks":{"FLCA":"Franklin FTSE Canada ETF","FXC":"加元ETF-CurrencyShares"},"translate_title":"加拿大央行对中性利率的估计可能过高","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"FLCA":1.5,"FXC":1.5},"content_text":"0909 ET - Canada's neutral interest rate might be a half-point lower than current Bank of Canada estimates, says economist David Watt at Rosenberg Research. Economists say the neutral rate is the level that neither stimulates nor subtracts from growth, and the BOC estimates that in Canada it sits between 2.25% to 3.25%. Watt says a population decline, two decades of flat growth in capital stock, and lingering US trade-policy uncertainty have pulled Canada's estimate for the neutral rate down by roughly 50 basis points, to between 1.75% and 2.75%. As a result, Watt says, the BOC's main interest rate is likely too high at 2.25%, and a rate increase to guard against inflation risks from higher oil prices would be an error. (Paul.Vieira@wsj.com; @paulvieira) \n\n\n  (END) Dow Jones Newswires\n\n\n  July 09, 2026 09:09 ET (13:09 GMT)\n\n\n  Copyright (c) 2026 Dow Jones & Company, Inc.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":true,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":true,"need_login_tip":false,"code":"91000000","status":"200"}}}