by Richard Lee
Canada?s central bank painted a dour picture for the world?s 11th largest economy following a decision to keep rates on hold at 1% ? as well as corresponding deposit rates.? The move wasn?t all too surprising given the global market and its current headwinds.? But, what was surprising was the bearish sentiment going forward, which forced policymakers to lower forecasts for the near term.
As before, Governor Mark Carney pointed towards Europe?s financial woes as adding volatility and uncertainty to global markets, which are already being underlined by ?greater than anticipated? contraction in China and other emerging countries.? The central bank noted the current situation as dampening commodity export growth, which the Canadian economy partially depends on for overall economic growth.? In addition, policymakers noted the current pace of government spending to be minimal in adding to the country?s expansion as consumers deal with ?record high household debt?.
As a result, the central bank is foreseeing a 2.1% pace of expansion in the current year, with a slight increase of a 2.3% growth rate next year.? Both rates are lower than the previously anticipated 2.4% forecasted rate ? with consumer prices remaining around 2%.
The decision and subsequent central bank text should place some downward pressure on the Canadian dollar in the near term, which is currently being fueled higher by positive correlations with crude oil.
Tags: Bank of Canada, Canadian Dollar, Foreign Exchange, Forex Commentary, Mark Carney, usd/cad
Source: http://www.onlineforextrading.com/blog/forex-bank-of-canada-stays-put-on-rates/
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