The awaited interest rate decision meeting from the BoC occurred yesterday, many noted that the decisions and outcomes of the meeting was likely to shape the future direction for the Bank of Canada and the Canadian economy. A hawkish tone was given off by the members of the meeting which has sent CAD soaring after a previous bad run.
BoC Less Downbeat and More Optimistic for the Outlook of CAD Growth
The Canadian Dollar soared yesterday after the BoC meeting surprised markets with a hawkish assessment of the global and domestic economic outlooks, which reversed the intraday stability and may have set CAD up for potentially gains in the future. The central bank of Canada left its cash rate unchanged at 1.75%, this was to be the final meeting of 2019 and it appears that this will be the figure it shall stay at for the rest of the year.
Optimism for Global Economy Stabilisation
The BoC also touched upon the current stability of the global economy. They stated that they have seen “nascent evidence” of a stabilisation in the global economy. The weakness of the global economy through the year is what has caused the bank cautious methodologies but also the markets have doubted whether Canada should continue to set itself apart from the major economy crowd for fears of unsustainability for the currency. In the meeting, the robustness of Canada’s economic condition was highlighted and the BoC mention a surprising rise in business investment for the recent quarter alongside a strong increase in housing construction.
Hawkish Tone Suggests Canada May Be in a Good Place Economically for the Future
The BoC’s hawkish tone has got investors paying close attention. The BoC is currently on target to meet their inflation goals and this target is set to remain there through the next upcoming years, which would induce steady interest rate for the future. The hawkish tone also dialled back the dovish announcement given off last time the Bank met, this tone has given off the sense that the BoC is firmly on hold for the time being. The resilience of the Canadian economy has seen the cash rate remain unchanged throughout the year. With the announcement of the BoC, CAD has risen against both USD and GBP. With USD weakening from a poor release of US economic data and easing in progress of the trade war.
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