Economists are divided over the Bank of Canada’s latest Monetary Policy Report released today. There is a split between those who see rates heading higher, and those who see the any action on rates of hold for now.

“Despite the recent plunge in stock markets, the Bank of Canada shows no sign of slowing the pace of monetary tightening,” says Bank of Montreal.

But TD Bank says that, despite the reassuring words, “there is little doubt that the underlying tone of the report is decidedly less sanguine than the April MPR. Thus, while another interest rate hike on September 4 can not be ruled out, the outcome is far from a slam-dunk. Much will depend on the tone of Canadian and U.S. economic reports in the weeks to follow.”

The Bank’s update noted that the risks to the outlook are balanced. On the upside, the “substantial amount of monetary stimulus still in place” flags the potential for stronger-than-expected growth. On the downside, the turmoil in global stock markets has the potential to undermine confidence and global growth.

RBC Financial Group points out that the downside risks from the financial markets have prompted the central bank to give itself a tiny bit of room to manoeuvre on policy. It cites that the “pace of policy adjustments will depend on the strength of the various factors at play and the implication for pressure on capacity and on inflation.”

TD concludes that the central ank will continue to raise rates in the months ahead. “However, the Bank has also left the door open to delaying any future tightening if the recent deterioration in financial-market conditions continues and upcoming economic releases sour.”

BMO Nesbitt Burns says, that, as stock markets plummet and the Canadian dollar continues to slide, Governor David Dodge is under pressure to reconsider his tightening stance. While it concedes that the report and press conference suggests further hikes, it says that the report is “ancient history”.

With the market plunge, BMO Nesbitt says that the U.S. Federal Reserve reportedly held an emergency meeting, and rate cuts in the U.S. cannot be ruled out. “Governor Dodge certainly recognizes that Canada is no longer impervious to the fallout of the stock market plunge. Without further scaring the public, he must caution that the Bank stands ready to postpone, and even reverse, its rate hikes in the trail of these events.”