PLUNGING OIL PRICES AND SCARCE DETAILS ON FISCAL STIMULUS MIGHT FORCE BOC TO CUT INTEREST RATE |
At the end of 2015 the possibility of a rate cut from the Canadian central bank in January was low with the majority of analysts putting it beyond the first quarter of 2016. The Federal Reserve had just announced a much-awaited rate hike to the U.S. benchmark interest rate which gave some breathing room to the Bank of Canada (BoC) regarding its next move. The CAD depreciated giving an edge to exporters and boost growth expectations. Now the rapid decline of oil (10.85 percent last week) might force the hand of BoC governor Stephen Poloz. Economists and analysts are divided on what to expect next week as Canadian fundamentals have shifted. Even if the moves are not a surprise, as they were for the most part anticipated, the speed in which they developed and the market reaction has many updating their forecasts of the Bank of Canada’s next move. |
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