It’s not just the United States that has a central bank and interest rates to decide. The Bank of Canada recently announced its decision for primary interest rate in the country, and things are holding steady. Not only did the bank leave the rate alone at 5%, but the iShares S&P/TSX 60 exchange-traded fund (TSE:XIU) also held its course, down only fractionally in Wednesday afternoon’s trading.
The decision didn’t strike many as a big surprise; analysts and economists all over were looking for the bank to hold its position going into this meeting. The rate was held steady, the bank noted, as “excess demand” seems to be departing the picture, and things are starting to once more level off. There were still concerns, however, about overall inflation risk—those numbers are still somewhat elevated at last report—and that may prompt further rate hikes later. But, for now, the Bank of Canada is prepared to hold on to things as they are, as they did at the last meeting and the meeting before that.
Not Everyone is so Sure
While much of the Canadian market seems to be content to hold out for a while and wait for things to improve, not everyone is so sure that this status quo can just carry on. Diane Francis, for example—a leading author and professor in Canada—noted that Canada itself is in “deep economic trouble.” Francis cited Doug Porter, an economist with the Bank of Montreal, who noted that the Canadian economy is “struggling to grow” and is sputtering despite “rapid population growth.”
With the Canadian economy itself largely moribund, it’s no surprise to see some thinking that a quantitative tightening plan might not be the route to take. But with several indicators not exactly flashing red, there does seem to be a case for at least maintaining position.
Is XIU a Good ETF to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on XIU ETF based on 50 Buys and 11 Holds assigned in the past three months, as indicated by the graphic below. After a 5.16% rally in its share price over the past year, the average XIU price target of C$34.30 per share implies 10.52% upside potential.
