Bank of Canada Leaves Rates Unchanged
September 3, 2008
The Bank of Canada left rates unchanged today keeping the overnight rate standing at 3.00%, a move that had been widely anticipated by the market place. The accompanying statement largely focused on the growth story within Canada, where in they iterated their concern over the growth outlook for the US and the global economy and the potential feed through effects. The bank also cited that recent decline in commodity prices has been a major factor in driving the Canadian Dollar lower. However, the BoC highlighted that domestic demand remains strong and that the “global weakness and weaker currency would have opposing effects on Canadian growth”. The BoC are clearly leaving monetary policy in a neutral stance with emphasis shifting from inflation to growth. As this statement somewhat offsets last weeks speculation that the BoC were adopting a more dovish approach to interest rates the Canadian dollar rallied 1.4% against the U.S. dollar.