The Bank of Canada kept its overnight rate at 1% during the Wednesday session as the market expected. However, there are hints and language that suggests that the BoC is still leaning towards possible rate increases in the future. The central bank suggested that the current expansion within the country is cause for a possible withdrawal of liquidity in the marketplace.
The Canadians are in the minority when it comes to central banks and their monetary policy expectations. Most central banks are looking to ease overall, and as a result it is likely that the Canadian dollar will eventually get a bid. However, during the session on Wednesday the Loonie wasn’t bid up much, mainly because of concerns elsewhere.
The Canadian economy remains near its full production potential according to the central bank, and as such the need to cool off the economy may come into play. This is in large part due to the fact that commodity prices have been rising. With the Americans likely to continue easing, this may push the BoC forward soon.
Canadians Keep Rate at 1%
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.