BoC holds on interest rates
with BMO Capital Markets, noted that the central bank’s announcement might be the shortest policy statement in its history. And for what it’s worth, Wednesday’s statement was 255 words long, down from 417 words on Jan. 18. Reitzes described Wednesday’s statement as nothing but a placeholder until the Bank releases its next Monetary Policy Report on April 12.
“They remain firmly on hold, and have opted to remain focused on the negatives, while largely overlooking the recent string of better data,” Reitzes said.
“The BoC’s dovish skew is intended to keep Canadian yields and the loonie under pressure. However, if the data continue to be positive, they won’t be able to deny the obvious for much longer.”
On Thursday, Statistics Canada will release data on the country’s 2016 fourth-quarter gross domestic product. The central bank said Wednesday that recent consumption and housing indicators suggest the Q4 GDP number will show that Canada’s economy grew slightly stronger than expected.
But the bank also noted that Canadian exports continue to face “competitiveness challenges” and have yet to pick up steam. Economic gains have yet to translate into broad-based employment growth.
“While there have been recent gains in employment, subdued growth in wages and hours worked continue to reflect persistent economic slack in Canada, in contrast to the United States,” the bank said.
The Bank of Canada’s next interest rate decision will be released on April 12. It will also release its latest Monetary Policy Report, which will update the bank’s outlook for the economy, inflation and risks.