The last rate cut by the Bank of Canada was two years ago, on July 15th, 2015. The central bank had cut its interest rate by 25 basis points, from 0.75 percent to 0.50 percent, owing to lower commodity exports and slowing economy. From that point it had maintained the 0.5% interest rate.
The last interest rate announcement was made on May 24th, 2017, when the bank maintained its target for the overnight rate at 1/2 percent and deposit rate at 1/4 percent.
Going against the trend, the Bank of Canada is expected to increase its key interest rate target today. The main pushing factor to rise the rate, which was otherwise dropping, can be attributed to the economy slowly and steadily slipping into the road to recovery. Economic activity has started to grow and has been robust in the recent quarters. Inflation remains well below the central bank’s two percent target, according to Governor Stephen Poloz. He also commented the economy is expected to remain above potential.
According to Statistics Canada, Gross Domestic Product grew 0.2 percent in April, with 14 out of 20 sectors showed growth.
With the Canadian dollar gaining in the recent weeks on expectations from an interest rate hike, it is going to be a rough ride for loonie as well as the market.
