Bank of Canada Releases Dovish Statement, Loonie Drops
The Canadian dollar fell today as Bank of Canada Governor Stephen Poloz kept interest rates unchanged and released a policy statement that was definitely less hawkish than statements of the previous central bank’s head Mark Carney.
As was expected, the BoC kept its main interest rate at 1 percent. Poloz was noticeably more dovish than Carney, saying that Canadian “economic growth is expected to be choppy in the near term”. He also complained that “inflation has been low in recent months”. In the end, he concluded:
As long as there is significant slack in the Canadian economy, the inflation outlook remains muted, and imbalances in the household sector continue to evolve constructively, the considerable monetary policy stimulus currently in place will remain appropriate.
Such wording suggests that a rate hike is unlikely in the near term even though the Governor said that rates will normalize eventually.
USD/CAD advanced from 1.0366 to 1.0410 as of 20:05 GMT today and its daily high was at 1.0437. EUR/CAD went up from 1.3644 to 1.3662, rising as high as 1.3704 intraday. CAD/JPY was little changed at 95.59.
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Earlier News About the Canadian Dollar:
- Canadian Dollar Falls as US Retail Sales Below Forecast (2013-07-15)
- Canadian Dollar Surges as Bernanke Indicates More US Stimulus (2013-07-11)
- Loonie Finds Support in Recent Economic Data (2013-07-09)
- CAD Gains on Employment Report, Loses to USD (2013-07-05)
- Canadian Dollar Mixed Ahead of Employment Reports (2013-07-05)