The first rate decision by Stephen Poloz sends the Canadian dollar lower. The key part in the rate statement is the part that was dropped: the “eventual hike language” disappeared from the text. The BOC is not really hawkish anymore. The interest rate remained at 1% as expected.
USD/CAD is above 1.04 once again. It reached 1.0432 before dropping back, but it remains above 1.04.
Here is a part of the statement talking about low inflation:
Inflation has been low in recent months and is expected to remain subdued in the near term. The weakness in core inflation reflects persistent material excess capacity, heightened competitive pressures on retailers, relatively subdued wage increases, and some temporary sector-specific factors. Total CPI inflation has also been restrained by declining mortgage interest costs. As the economy gradually returns to full capacity and with inflation expectations well-anchored, both core and total CPI inflation are expected to return to 2 per cent around mid-2015.
In the US, Bernanke begins his testimony in Washington. The testimony itself was already released, and it contained nothing new.
The Bank of Canada will release its report later on, with an accompanying press conference held by governor Poloz.
For more events, lines and analysis, see the USD CAD forecast.
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