Yesterday’s announcement from the Bank of Canada continues to influence the loonie in trading. The Canadian dollar is still struggling today after the change in the central bank’s stance, and the language used to forecast the likely economic situation through 2015.
Yesterday, the Bank of Canada announced that inflation is unlikely to hit its 2 per cent target until the end of 2015. Back in July, the forecast called for the 2 per cent target to be hit by the middle of 2014. With this new pushback, there is speculation that the Bank of Canada won’t be raising interest rates anytime soon. Policymakers also mentioned the risks of further economic weakness.
All of this points to a continued loose monetary policy for the Bank of Canada. While Canada has not had to resort to the easing methods employed by many other countries, the fact that an accommodative interest rate policy is likely to remain in place for at least another year is weighing on the loonie.
Yesterday’s drop in oil prices didn’t help the Canadian dollar, since oil is a major export. Oil prices are inching higher today, but the loonie is not.
At 13:42 GMT USD/CAD is up to 1.0449 from the open at 1.0422. EUR/CAD is up to 1.4409 from the open at 1.4381. GBP/CAD is up to 1.6905 from the open at 1.6886.
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