BoC monetary policy decision - Overview
The Bank of Canada (BoC) is scheduled to announce its latest monetary policy update at 15:00 GMT this Wednesday. The BoC is widely expected to leave its benchmark interest rates unchanged at 1.75% at the conclusion of December policy meeting. Hence, the key focus will be on the tone in the accompanying policy statement, wherein even a small change could certainly move the Canadian dollar and trigger some volatility.
Analysts at TD Securities also expect the Canadian central bank to hold fire today and explained: “We don't expect the Bank to say much given substantial uncertainty still clouds their outlook; we expect them to repeat that the outlook is evolving as expected while the last paragraph should maintain a heavy emphasis on data dependence.”
How could it affect USD/CAD?
According to Yohay Elam, FXStreet's own analyst: “A balanced picture should be enough to send USD/CAD down. If Poloz and his colleagues paint a rosy picture, noting healthy inflation, rapid wage growth, high investment, and optimism about a stabilization in the global economy, USD/CAD may plunge.”
“Another scenario is that the bank expresses concerns about ongoing trade uncertainties and sees the glass half empty, such as focusing on weak consumption. However, given recent comments by officials, this path has a lower probability. In this case, USD/CAD may rise,” Yohay added further.
About the BoC interest rate decision
BoC Interest Rate Decision is announced by the Bank of Canada. If the BoC is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the CAD. Likewise, if the BoC has a dovish view on the Canadian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.
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