In a widely anticipated move, the Bank of Canada opted to leave rates at 0.50% as the inflation picture grows more assured. The risks of lowering rates further raise the risk of problems with taming inflation, especially at a point when the recovery in oil prices has helped temper the weakness in the Canadian dollar. According to current forecasts, inflation is expected to reach the 2.00% target in 2017, however, growth is expected to be weaker going forward. The Central Bank revised projections for GDP expansion downwards to 1.30% for 2016, 2.20% in 2017, and 2018 growth of 2.10%. The main concern raised by the latest statement from the Central Bank was the troublesome conditions in certain high profile real estate markets including Vancouver and Toronto. The reaction in the Canadian dollar was largely positive following the announcement, with the USDCAD pair falling back below 1.3000 to trend near 1.2927.
Canadian Dollar Strengthens Despite Revised Outlook
Daily Analysis - 14/07/2016