Canadian Dollar Gains As Central Bank Raises Economic Outlook By Investing.com



© Reuters.

By Dhirendra Tripathi

Investing.com – The Canadian dollar strengthened against the greenback after some initial hiccups in Wednesday’s trade, boosted by the country’s central bank forecasting a better economy.

Bank of Canada kept the key interest rate unchanged at 0.25%.

The Bank said it expects economy to grow 6.5% in 2021, up from its January forecast of 4%, with real GDP growth of 3.7% in 2022, down from a previous forecast of 4.8%. It now sees U.S. economic growth this year at 7%, up from 5%.

The Bank said the economy still needs “extraordinary monetary policy support” and that it is committed to holding the policy interest rate lower “until economic slack is absorbed so that the 2% inflation target is sustainably achieved.”

Nonetheless, improving economic indicators are behind the bank’s decision to trim its federal government bond purchases that were aimed at reviving the economy.

Effective April 26, weekly net purchases of government of Canada bonds will be adjusted to a target of $3 billion, the central bank said.

Like what many in several markets have feared their central banks will do, it suggested rates could rise sooner than the previous forecast of sometime in 2023.

Canada’s annual inflation rate doubled to 2.2% in March, in part due to a statistical difference caused by the sharp deceleration last year during the pandemic and because of rising energy prices, Statistics Canada said on Wednesday.

Over the next few months, inflation is expected to rise temporarily to around the top of the 1% to 3% inflation-control range, the central bank said.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Source link

We will be happy to hear your thoughts

Leave a reply