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.
“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.”