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Market Awaits Bank of Canada Decision

Published January 18, 2017
  • The Bank of Canada will release its monetary policy report, rate statement and overnight rate at 10:00 AM EST; market expectations are indicating no change in the overnight rate despite higher oil prices and stronger labour markets
  • Investors are looking to BoC Governor Stephen Poloz to offer further guidance on Canadian monetary policy during his press conference today at 11:15 AM EST; lackluster Canadian inflation, US economic outlook and the US Federal Reserve’s projected interest rate hikes remain a concern for Poloz
  • Economists are expecting Poloz to offer a “cautiously optimistic” tone as the BoC awaits further data on Canadian inflation and labour participation, as well as economic outcomes from a Trump administration; there is a 20-30% chance of a BoC interest rate cut in 2017
  • WTI Crude Oil is down nearly 2.2% percent this morning after supply worries returned due to assumed increased shale production from US producers; representatives from the International Energy Agency echoed the likelihood of increased supply from American oil rigs
  • According to OPEC’s monthly report, the world oil supply fell by 0.30 million barrels per day in December; however, overall, year-on-year supply rose by 0.71 million barrels per day
  • The USD/CAD rate reversed previous losses from yesterday as investors refocused on the prospect of rising inflation and US labour market strength; American month-on-month CPI showed positive data leading to the largest year-on-year increase in 2.5 years
  • Federal Reserve Chair Janet Yellen will speak at 3:00 PM EST today with Fed officials Robert Kaplan and Neel Kashkari speaking as well; John Williams stated yesterday the US economy had reached maximum employment and this warranted gradual increases in interest rates  

Charts (1) Canadian Interest Rate since 2008 (2) US Inflation Rate since January 2016