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Canada Rate Decision Imminent!
By Mike Conlon | January 19, 2010
Canada’s interest rate decision is due out at 9:00AM this morning. It is widely accepted that they will leaves rates unchanged at .25%, which is a record low. Inflation appears to be well within the Central Bank’s target rate of 2%, which could mean that they won’t consider a rate hike until the second half of the year.
Part of the reason to remain flat is due to Canada’s reliance on a US economic recovery, as the US is the largest market for Canadian exports. So it is quite possible that we won’t see a rate hike in Canada until we see one in the US. While the recovery is taking place in Canada, its not strong enough to warrant rate hikes at this time.
According to Bank Governor Mark Carney, the economy will operate with “slack” throughout the middle of next year as the Canadian dollar’s 20% gain versus the US dollar has hampered exports.
So barring any unlikely rate hikes, I expect the Loonie to trade sideways until inflation becomes a problem in Canada, and the Loonie will continue to benefit from its status as a commodity currency.
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