Used to be having a strong dollar was a “status symbol” on the world stage, but these days, the reality is low dollar = stronger exports, and exports = growth. In fact, it seems many countries are competing to keep their “dollar” low to spur manufacturing and exports. And it’s working here too as our economy continues to grow moderately as the BoC attempts to skirt a recession.
No doubt, Bank of Canada Governor Tiff Macklem continues to watch U.S. Fed rate decisions as he concentrates on keeping the Canadian dollar in a range that supports economic growth. With economists predicting that the U.S. Fed will lower their Benchmark rate on September 18th and Canada’s July inflation dipping to 2.5%, as announced on August 20th, it was no surprise that the Bank of Canada lowered the Key Rate to 4.25% on September 4th.
Right now, we’re watching a world marching toward recovery and stability but in disagreement about some fundamentals. A key one being the role that inflation should play in a new era of monetary policy. The bright side is that inflation seems to be falling both here and south of the border. This has pundits already focusing on the Bank of Canada’s next Policy Meeting on October 15th where it’s anticipated that the Key Rate will again be cut. It would be great to see that the incoming data over the next few weeks supports this prediction.
Comments are closed.
