Decision. The BoC is in an uncomfortable dilemma On the one hand, the return of inflation to target has again been slightly postponed to the second half of 2025 instead of mid-2025. As far as inflation is concerned, the new projections do not exactly give the all-clear. On the other hand, expected growth has also been revised downwards.
Weaker economic growth increases the risk that the BoC will ultimately go too far with further rate hikes. This dilemma casts doubt on whether the BoC will follow up with another rate hike. The CAD therefore has little to offer against the US Dollar for the time being. After all, the Fed is perceived as much more hawkish and the US economy as much more robust – at least for the time being.
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Canadian Dollar’s Outlook Hinges on Bank of Canada. What to Expect for USD/CAD?Bank of Canada is expected to keep interest rates unchanged at 5.0% on Wednesday, but the institution may issue a slightly less hawkish guidance, creating the right conditions for further USD/CAD’s strength.
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