The Bank of Canada (BoC) is anticipated to lower its policy rate by 25 basis points on Wednesday, marking the sixth consecutive reduction. The Canadian Dollar has been stabilizing against the US Dollar after a sharp depreciation in late 2022. Headline inflation in Canada remains below the BoC's 2% target, though the core CPI edged up in December. Despite the rate cut, the BoC is expected to maintain a cautious outlook due to easing inflation, a softening labor market, and GDP hovering near forecasts. Market attention will be focused on the BoC's tone, which could have a greater impact on the Canadian Dollar than the rate decision itself.
Bank of Canada is expected to cut its policy rate by 25 bps. The Canadian Dollar remains on the defensive against the US Dollar. Headline inflation in Canada remains below the bank’s 2% target. The BoC will also release its Monetary Policy Report . The spotlight is on the Bank of Canada this Wednesday, with widespread expectations that it will lower its policy rate for the sixth meeting in a row.
Pablo Piovano, Senior Analyst at FXStreet, highlights that USD/CAD now appears sidelined in the upper end of the recent range, following a strong upward trajectory in place since October, with the pair reaching a 2025 peak at 1.4516 on January 21. Looking ahead, Pablo notes: The next key target is the 2020 high at 1.4667, recorded on March 20. He also points out potential downside levels, saying: Occasional bearish moves could push USD/CAD to test the 2025 bottom of 1.
BANK OF CANADA INTEREST RATES CANADIAN DOLLAR INFLATION MONETARY POLICY
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