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Mt4.mt5 foreign exchange news - the Bank of Canada (BOC) raised interest rates by 50 basis points as scheduled

发布时间：2022-08-25 浏览：122

Bank of Canada June interest rate resolution monetary policy statement

The Bank of Canada today raised its overnight interest rate target to 1.5%, the bank rate to 1.75%, and the deposit rate to 1.5%. The central bank will also continue to implement quantitative tightening (QT) policy.

Global and Canadian inflation rates continued to rise, mainly due to rising energy and food prices. In Canada, CPI inflation reached 6.8% in April, much higher than the bank's expectations, and it is expected that it may rise further in the short term before easing.

With the general cost price pressure penetrating into consumer prices, inflation continues to expand, with the core inflation index between 3.2% and 5.1%. Nearly 70% of CPI categories have inflation rates higher than 3%. The risk of rising inflation has risen. The Bank of Canada will use its monetary policy tools to restore the inflation rate to the target level and maintain good and stable inflation expectations.

Global inflation is intensifying at a time of global economic slowdown. The conflict between Russia and Ukraine, the COVID-19 and the continuous supply disruption are all affecting economic activities and increasing inflation. Geopolitical war has increased uncertainty and brought further upward pressure to the prices of energy and agricultural products.

This makes the outlook bleak, especially in Europe. In the United States, although the economy contracted in the first quarter of 2022, domestic demand remained strong. The labor market in the United States continues to strengthen and the pressure on wages is intensifying. The global financial situation is tightening and the market is volatile.

Canada's economic activity is strong, and there is obvious excess demand in its economic operation. The national economic accounting data of the first quarter of 2022 shows that the GDP growth rate is 3.1%, which is consistent with the prediction of the central bank's monetary policy report (MPR) in April.

Job vacancies have increased, companies have reported widespread labor shortages, and wage growth in all sectors is accelerating and expanding. Housing market activity is slowing from an exceptionally high level. With Canadian consumer spending remaining strong and exports expected to strengthen, growth in the second quarter is expected to remain robust.

With excess economic demand, inflation continues to be much higher than the target and is expected to rise further in the short term, the monetary policy management committee of the Central Bank continues to believe that interest rates need to be further raised.

Policy interest rate is still the main monetary policy tool of banks, and quantitative tightening is a supplementary tool. The pace of further raising policy interest rates will be guided by the central bank's continuous assessment of the economy and inflation. If necessary, the central bank is ready to take stronger actions to achieve its commitment to the 2% inflation target.

The US dollar fluctuated slightly against the Canadian dollar after the interest rate resolution, and subsequently fell

The dollar only fluctuated slightly against the Canadian dollar after the announcement of the interest rate resolution, mainly because the market has fully digested the expectation of the Bank of Canada to raise interest rates by 50 points in the past three weeks.

The daily chart shows that the dollar broke the upward trend line (1.2730) against the Canadian dollar since June last year next Monday, and today showed signs of further falling below the key position of 1.2650, leading to a bearish outlook for the follow-up. The initial support is at 1.26, and breaking this position will open the space to fall to 1.25. If it rebounds, focus on the regional resistance of 1.27-1.2730.