Growth data released on Tuesday showed the Canadian economy expanded 0.1% in September on a monthly basis and at a 0.7% rate in the third quarter, surpassing expectations of a 0.4% rate. Analysts at CIBC, point out that while headline growth was stronger than expected in the third quarter it shouldn’t change the trajectory for Bank of Canada policy. They continue to expect a final 50bp rate hike to a peak of 4.25%.
“Canadian inflation remains high and broad-based and more interest-rate increases will be needed to cool the overheating economy,” said Bank of Canada Governor Macklem in a testimony at the House of Commons late Wednesday, reported Reuters.
Reuters reported that Senior Deputy Governor Carolyn Rogers said in a speech at the University of Ottawa that higher interest rates are starting to slow the Canadian economy, putting pressure on households with elevated debt.
The BoC left rates on hold, but they ended QE and brought rate guidance forward to the middle quarter of 2022 from sometime in the second half of 2022. This move was supportive for the CAD and should continue to be over the medium term as long as oil prices don’t collapse.
So, QE ended (so far in Canada, but the Fed will follow suit) and the termination plunged gold prices in Canadian dollars. Will this repeat globally?
Today's BoC monetary policy announcement was much more hawkish than expected. The BoC ended its quantitative easing program with immediate effect, and also signaled that policy interest rates could start rising earlier than previously expected.
The Bank of Canada is the nation's central bank. Its principal role is "to promote the economic and financial welfare of Canada," as defined in the Bank of Canada Act. The Bank’s four main areas of responsibility are:
The official website, on Twitter and YouTube
Tiff Macklem was born in Montréal, Quebec, in 1961. He was appointed Governor of the Bank of Canada, effective 3 June 2020, for a seven-year term. He is the tenth governor of the Bank of Canada. As Governor, he is also Chairman of the Board of Directors of the Bank for International Settlements (BIS). He currently chairs both, the BIS Audit Committee and the Consultative Council for the Americas.
The World Interest Rates Table reflects the current interest rates of the main countries around the world, set by their respective Central Banks. Rates typically reflect the health of individual economies, as in a perfect scenario, Central Banks tend to rise rates when the economy is growing and therefore instigate inflation.
