Some economists and big banks, including BMO, are calling for another rate hike from the Bank of Canada in an upcoming decision in July. Market odds are leaning that way as well, Reitzes notes.The Fed also signalled two small rate hikes could be in the cards for the rest of the year following its pause in June.
TD Bank senior economist James Orlando said in a note to clients on Wednesday that if the U.S. economy slows according to TD’s forecasts in the latter half of the year, it could be enough to keep the Fed on pause indefinitely — despite the suggestion of additional hikes. The Canadian dollar hit a four-month high ahead of Wednesday’s rate decision from the U.S. Fed, according to Reuters, which said strength in oil prices was giving another boost to the loonie. The Canadian dollar held steady at around 75 cents to the U.S. dollar Wednesday afternoon following news of the pause.
But it also affects the costs of imports from the U.S., which can take some of the pressure off inflation, he adds.
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