Bank of Canada: Little Prospect of Further Easing - ING
James Knightley, Senior Economist at ING, notes that today’s statement from the Bank of Canada, suggests that there is little prospect of any easing in the near future.
Key Quotes:
“The
Bank of Canada has left monetary policy unchanged – the overnight rate
remains at 0.5%. The statement accompanying the decision suggests that
there is little prospect of any further easing in the near future.“
“While
the BoC acknowledges that the global backdrop hasn’t been as positive
in the first quarter as they had predicted, the growth story for Canada
in Q1 “appears to have been unexpectedly strong”, although this has been
put down to temporary factors. The statement highlights decent job
creation and expanding household demand whilst also stating that
investment spending should turn more positive in 2H16. Indeed, “it does
appear that the positive forces at work in the economy are starting to
outweigh those that are negative” the statement goes on to say.”
“Given
they also sound relatively relaxed on the recent movements of the
Canadian dollar and core inflation is already close to target, we are
going to need to see some fairly significant data disappointments to get
any more rate cuts. Consequently, we now expect the BoC to remain on hold until 2Q17 when we believe interest rate hikes will start occurring.”
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