Bank of Canada Preview
July 18, 2011
The Bank of Canada will most likely announce at 13:00 GMT Tuesday a decision not to raise its 1.0% overnight money rate target, which has been at 1.0% since early September 2010 following three consecutive 25-basis point increases. World financial markets are too fragile to risk a hike now even if that were otherwise appropriate. The fact is that Canada can afford to wait. Strong commodity prices and comparatively sound public finances make the Canadian dollar a good hedge for investors wishing to stay clear the U.S. dollar and euro. See this article posted earlier today for details of the massive foreign demand for Canadian securities this year. Canadian economic growth has been looking perkier, as I noted in this feature written a week ago.
Even if Canadian officials let policy be, investors will learn considerable new information from tomorrow’s statement, which will include new growth and price forecasts and a quarterly Monetary Policy Report that arrives on Wednesday. Stay tuned.
Copyright Larry Greenberg 2011. All rights reserved. No secondary distribution without express permission.