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Bank of Canada faces October rate decision amid energy risk focus

RBC says demographic revisions may lower the need for BoC hikes, but energy price risks and unchanged slack indicators keep October as a difficult call.

Reported · Written up by our desk · Central Banks

FXStreet reports that Rachel Battaglia of Royal Bank of Canada argues higher backward-looking population growth points to stronger potential output, which mechanically reduces pressure on the Bank of Canada to raise rates.

The RBC view, however, is that policymakers are increasingly focused on energy price risks, and key slack indicators such as unemployment and business surveys have not shifted with demographic updates.

With those labor and survey measures unchanged, FXStreet says the October policy meeting remains a difficult decision as the balance between revised potential growth and energy-related risks evolves.

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