Poloz Puts Canadian Rates Firmly on Hold Amid Global Trade Risks

Canadian dollar nears 8-month high ahead of Bank of Canada rate decision

The bank's governing council will also consider positive signs on trade, including a cease fire between China and the USA and the lifting of American tariffs on Canadian goods, he said.

The bank raised its second-quarter annualized economic growth estimate for Canada to 2.3% from 1.3%, in part because of temporary factors such as the reversal of weather-related softness and a surge in oil exports.

Fallout from the uncertain global trade environment was also reflected in the bank's updated economic projections, which were also released Wednesday in the bank's quarterly monetary policy report.

Adding to the sense the Bank of Canada has moved marginally more dovish is Governor Stephen Poloz's reluctance to talk about raising interest rates - as he has in the past - at a press conference after the decision.

The Bank of Canada's latest read on the strength of this year's economy is still short of the pace it had expected in January, when its first policy report of the year projected 1.7 per cent growth for 2019.


"The Bank of Canada will have to decide whether it believes that there's further for this momentum to go", said Mendes, noting that the oil-producing province of Alberta has partially lifted production cutbacks. The bank's interest rate has been at 1.75 per cent since last October. A rate-reduce by the U.S. Federal Reserve could presumably well maybe impact their earnings as neatly, as lenders possess had weaker earnings growth in their dwelling market of unhurried supplemented by stronger showings from their U.S. and worldwide businesses. But its tone suggests a cut is more likely than an increase, a shift from earlier this year.

At the same time, the central bank said some of the recent pick-up will be temporary, and growth will decelerate in the third quarter.

The USD/CAD pair seems to be edging lower following these remarks and was last down 0.1% on the day at 1.3110. We are anticipating a couple of rate cuts from the Fed. "Canada is still somewhat optimistic that growth will pick up in Q2... though they're still concerned about trade tensions, a slowing global economy". "Taken together, the degree of accommodation being provided by the current policy rate remains appropriate". That conflict is "curbing manufacturing activity and business investment and pushing down commodity prices", the bank said in a statement accompanying its rate decision.

Broader global trade tensions are driving down commodity prices and are outweighing some positive developments, such as the removal of USA tariffs on Canadian steel and aluminum.

The Bank of Canada is unique among its peers in that most data is trending in the right direction. The Financial institution of Canada is determined to present one other hobby-rate announcement on Wednesday, which follows the news final week that the Canadian economic system shed around 2,200 jobs in June (despite the indisputable truth that the unemployment rate remained at a reach-account low).

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