22 Jan

Bank of Canada Maintains Rate at 1%

General

Posted by: Rabinder Dhillon

The Bank of Canada is warning that unusually low inflation pressures will persist well into 2016 – a new forecast that could further delay future interest rate hikes and send the Canadian dollar lower.

The central bank kept its key overnight interest rate unchanged at 1% today, or where it has been since September 2010.

But the clear signal from bank Governor Stephen Poloz is that disinflation is his paramount concern, and it isn’t fading any time soon. 

“Inflation is expected to remain well below target for some time, and therefore the downside risks to inflation have grown in importance,” the central bank said in a statement.

Bank of Montreal Chief Economist Douglas Porter said Poloz is getting what he wants – a lower dollar – without actually cutting rates to get it. “Suffice it to say that the bank is welcoming the weakening Canadian dollar with open arms,” Porter said.

Click here for more from the Globe and Mail.

10 Jan

Bank of Canada chief Poloz says rates on hold until economic data improves

General

Posted by: Rabinder Dhillon

The Bank of Canada should keep its key interest rate on hold until economic data persuades it otherwise, Central Bank Chief Stephen Poloz said on Tuesday, adding that he was not worried about calls from some international players to tighten policy.

His comments follow controversial remarks by Canada’s finance minister on Sunday suggesting there would be pressure to raise interest rates in 2014.

“For us, minimizing the risks of making a big mistake here is what we’re trying to do, and that tells us that we should be holding rates where they are until the data flow changes our mind,” Poloz said in an interview with CBC television.

Asked about the potential for higher rates in 2014, Finance Minister Jim Flaherty told CTV television on Sunday there would be some pressure to tighten because of the US Federal Reserve scaling back its bond-purchasing program.

Click here to read more from the Financial Post.