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BoC might keep policy on hold for the rest of 2015 – Rabobank
FXStreet (Barcelona) - The Rabobank Team explains that the January rate cut is sufficient for improving the outlook of the Canadian economy, and the Bank of Canada might keep rates on hold for the rest of 2015.
Key Quotes
“The Bank of Canada kept policy on hold as well. In an pre-emptive strike the BoC had already lowered its target rate to 0.75% to provide insurance against downside risks resulting from the sharp drop in oil prices. In yesterday’s monetary policy report the BoC significantly adjusted its 15Q1 growth forecast downwards, from an annualized 1.5% to 0.0%, noting that the impact of the oil price shock is “more front-loaded than predicted in January, but not larger”.”
“In the longer term, the depreciation of the CAD should bring about an acceleration in non-energy exports, an increase in investment and an improvement in the labour market. In other words, the insurance taken out in January is still considered sufficient.”
“Unless the impact of the oil price shock turns out more severe than currently anticipated, we expect policy to remain on hold at 0.75% for the remainder of 2015.”