BoC surprised with holding and will stay on hold – Nomura
By FXStreet FXStreet (Guatemala) – Analysts at Nomura noted that the BoC keeps policy rate unchanged, conceding defeat on its power to help the economy.
Key Quotes:
“Against our expectations, the Bank of Canada (BoC) left its policy rate at 0.50%. The BoC noted that “the risks to the profile for inflation are roughly balanced” and that “the Bank’s Governing Council judges that the current stance of monetary policy is appropriate”, suggesting a neutral policy stance and that the BoC is not considering further easing.”
“On growth, the BoC noted that “prices for oil and other commodities have declined further and this represents a setback for the Canadian economy.”
“GDP growth likely stalled in the fourth quarter of 2015, pulled down by temporary softness in the U.S. economy, weaker business investment and several other temporary factors.”
“The Bank now expects the economy’s return to above-potential growth to be delayed until the second quarter of 2016.” As a result, the BoC has lowered its GDP growth forecast for 2016 to 1.5% from 2.0%, delaying the closing of the output gap.”
“However, what is the most surprising is that the BoC expects growth of 2.4% in 2017 and the output gap to be closed by the end of 2017. This …read more
Source:: FX Street
