Posthaste: Bank of Canada expected to hold rates, but limping loonie could be wild card in months to come

One big concern is divergence with the United States Federal Reserve.

Money markets are betting that chairman Jerome Powell will raise the Fed funds rate to between 5.25 per cent and 5.5 per cent, and that would test the Bank of Canada’s resolve, said economists in a Bloomberg survey. “Canada does not need more hikes to cool inflation, although they may be forced to hike if the gap in policy rates starts to cause major currency weakness,” said BofA global economist Ethan Harris.Article content

“If the Bank were to send a dovish message [this] week, it would risk a sharper exchange rate depreciation that would increase the upside risks to imported goods inflation,” wrote Brown.While acknowledging that a growing policy rate differential would not be supportive of the Canadian dollar, National Bank economists disagree that this will force governor Tiff Macklem’s hand.

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ANALYSIS | Why the Bank of Canada is expected to (finally) leave interest rates unchanged | CBC NewsThe Bank of Canada will announce its latest interest rate policy on Wednesday. The central bank appears poised to make good on its promise to pause rate increases. Corporate Greed is the issue, control that. Don't expect inflation to decline any time soon then. Way to early these guys just gave cold fèt.
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