Bank of Canada key interest rate remained unchanged

Noam Stiekema

The Bank of Canada key interest rate remained unchanged. The institution said that the indices for crude oil prices and inflation close to its forecasts and weaker currency would help the non-energy exports. On Thursday, the Bank of Canada decided to leave the rate on loans for one day between commercial banks to 0.75%, as […]

Bank of Canada

Bank of CanadaThe Bank of Canada key interest rate remained unchanged. The institution said that the indices for crude oil prices and inflation close to its forecasts and weaker currency would help the non-energy exports. On Thursday, the Bank of Canada decided to leave the rate on loans for one day between commercial banks to 0.75%, as expected by the majority of economists. The yields on two-year bonds rose the most serious pace for the last five years and the currency erase losses.

The bank Governor Stephen Poloz said last week that the surprise rate cut of 21 January has given the bank time to examine the effect of the fall in oil prices on the economy. Cuts led to “substantial facility ‘financial conditions, which will avert the negative impact of the shock in oil prices, the bank said from Ottawa.

The calmer financial conditions in the yield curve and the weaker CAD will help non-energy exports and investment, the bank said on Thursday. Yields on two-year Treasury bond rose to their fastest pace since October 2009, rising by 12 points to 0.62%. The CAD fell by 7% this year to Wednesday. It regained some of the losses as investors reduced bets that the central bank would reduce interest rates in April. The majority of the negative effect of lower oil prices would have appeared in the first half of 2015, although there may be stronger than anticipated in January, the bank said.

The CAD regained some of its losses after the decision and rose with 0.5% to 1.2428 for 1 USD. The currency has lost 6.5% of its value this year against the USD.

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