20 June 2014
“The period of low inflation in Canada is coming to its end, and I think the central bank will change its rhetoric till the next meeting,” – noted Bank of Montreal chief economist Doug Porter.
As you know, Mr. Poloz said the BoC targets inflation and not the currency, although he was quite disappointed by the weak export growth.
Canada was the first in the Group of Seven to raise its key lending rate after the 2008-09 recession, but it has kept it unchanged at 1% since September 2010.
According to Poloz, the central bank’s policy remains neutral, meaning the rates may go down as well as go up.
Meanwhile, yields on overnight index swaps show the forecasts of rate decline have weakened. And even before today’s data was released most economists were sure the next rate change will be definitely an increase.