Bank of Canada’s outlook on the Canadian economy changes slightly

Yesterday the Bank of Canada gave a speech in Nova Scotia outlining its views of the Canadian economy in the short term. It had recently intimated that Canada’s inflation rate was too big to ignore, and it would likely hike interest rates sooner than expected. It’s consternation in regard to the economy had been expected, however, the strength of the Canadian dollar has slowed the BoC’s views. It now believes that inflation will pop temporarily above 3% but will drop back below 2% by year end. The BoC is willing to ride out this blip hoping that the exuberance of a post pandemic world will subside, and a new form of normality will kick in.

In the meantime expect some volatility on the USDCAD.

Currently*          Close                     Range

USDCAD               1.2115                   1.2160                   1.2080-1.2178

EURCAD               1.4705                   1.4687                   1.4670-1.4728

GBPCAD               1.7075                   1.7085                   1.7032-1.7102

*Indicative rates