Bank Of Canada Raised The Interest Rate To 4.5%
On January 25, The Bank of Canada raised the interest rate from 4.25% to 4.5%, in line with the analyst consensus. BoC added that it would continue its policy of quantitative tightening.
BoC expects that Canada’s GDP will grow by about 1% in 2023 and about 2% in 2024. There were no major changes compared to the previous outlook, which was released in October.
According to the Monetary Policy Report (MPR), inflation is projected to fall to around 3% in the middle of 2023 and reach the 2% target in 2024.
Importantly, BoC signaled that it may leave the interest rate at current levels: “If economic develoments evolve broadly in line with the MPR outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases.”
Canadian Dollar Retreats After Dovish Signals From BoC
USD/CAD moved back above the 1.3400 level as BoC signaled that it may leave the interest rate at 4.5%. The Fed is expected to keep raising rates in the near term, so BoC’s signal was dovish.
Not surprisingly, Canadian dollar found itself under pressure after the release of the BoC Interest Rate Decision. USD/CAD has been consolidating near the 1.3400 level, and it has a decent chance to gain upside momentum in the upcoming days.
For a look at all of today’s economic events, check out our economic calendar.
Original article: https://www.fxempire.com/news/article/boc-raises-rate-by-25-bps-signals-it-may-be-the-last-hike-1264932
