Brenda O’Farrell
Investing.com – In the wake of yesterday’s Bank of Canada issuing a dovish outlook for the Canadian economy, the S&P/TSX Composite gained, hitting a new record, while the Canadian USD/CAD dropped to a one-month low compared with the U.S. greenback.
Although the central bank’s decision to hold the key interest rate at 1.75%, it did not rule out the possibility of lowering the rate in the coming months if necessary.
The decision to keep the overnight lending rate steady was based on the central bank’s latest quarterly forecast that predicted Canada’s economy would continue to grow, but at a slower rate. The BoC expects the economy will expand 1.6% in 2020. That’s 0.1% lower than its estimated issued last October.
Analysts have noted that the BoC outlook is based on the dollar remaining steady, a factor that is not quite holding as the loonie has gained since the beginning of the new year.
The BoC comments bolstered the stock markets. At the end of the trading day Wednesday, the S&P/TSX Composite was up more than 27 points, closing at 17,599.86, while the dollar dipped to 76.53 cents U.S.
This morning, the loonie continues to drop, trading at 76.01 cents U.S.
The price of crude oil is also down this morning, trading at about US$55.64 a barrel.