BoC Rate Decision Sparks CAD Rally
July 15, 2008
The Bank of Canada has decided to leave rates unchanged today, keeping the overnight rate standing at 3.00%. This move had been widely anticipated by the market place. The key revelation within the accompanying statement was the fact that the BoC see a risk of the headline consumer inflation reaching 4.00%, a level not seen since 2003 and a level which is a full percentage point above their 1-3% band. However, the overall tone of the accompanying statement suggests that risks are currently evenly balanced and therefore the central bank will continue to adopt a neutral stance. Following the BoC’s interest rate announcement the Canadian dollar traded below parity against the U.S. dollar for the first time since June 3rd 2008.