{"id":293500,"date":"2021-01-19T00:48:16","date_gmt":"2021-01-18T13:48:16","guid":{"rendered":"https:\/\/www.gomarketingteam.com\/articles\/preview-the-bank-of-canada-rate-decision\/"},"modified":"2021-02-19T12:12:58","modified_gmt":"2021-02-19T01:12:58","slug":"preview-the-bank-of-canada-rate-decision","status":"publish","type":"post","link":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/preview-the-bank-of-canada-rate-decision\/","title":{"rendered":"Preview: the Bank of Canada rate decision"},"content":{"rendered":"

By Klavs Valters<\/strong>
\n\u00a0@klavsvalters<\/a><\/p>\n

One of the must-watch economic events this week will be the Bank of Canada interest rate decision. The rate decision is due to be announced at 15:00 PM London time on Wednesday.<\/p>\n

Why is the announcement important?<\/strong><\/p>\n

A bank interest rate is a rate at which a country’s central bank lends money to local banks. The interest rate is charged by the nation’s central or federal bank on loans and advances to control the money supply in the economy and the banking sector. The Bank of Canada has an inflation target of 1% to 3% (currently 1%). The interest rates are changed accordingly to meet the target. The decision to increase, decrease, or maintain the interest rate has a significant impact on the financial markets so it is one of the most closely watched economic events in the calendar.<\/p>\n

Bank of Canada interest rate changes since 2015<\/strong><\/p>\n

\"\"<\/p>\n

Expectations<\/strong><\/p>\n

All eyes will be on the Bank of Canada governor, Tiff Macklem on whether the interest rate remains unchanged at 0.25% or reduced closer to 0%. Canada has had one of the strictest lockdown measures in the world in its fight to defeat the Coronavirus in recent months, which has had a considerable impact on the country\u2019s economy.<\/p>\n

Despite that, the rates are expected to remain unchanged, according to economists.<\/p>\n

Brett House, vice-president, and deputy chief economist at Scotiabank:<\/p>\n

”We do not expect a rate cut from the Bank of Canada at its next meeting as rate-sensitive sectors don\u2019t need an additional boost. For instance, Governor Macklem noted before the holidays that we should watch how housing is faring … Canadian home sales were up 7.2 per cent month-over-month in December to set a record for the month, which completed an annual gain of 12.6 per cent year-over-year. In other areas, retail sales have been above year-ago levels for several months.”<\/p>\n

”Although some immediate risks to the economy have gone up with intensified restrictions to stem the spread of COVID-19, medium-term risks relevant for setting monetary policy have abated. Vaccines are being delivered about a year ahead of the Bank of Canada\u2019s earlier expectations; the U.S. stimulus and funding bill passed and a government shutdown was averted, which will provide some positive spillover effects into Canada; and financial conditions remain favourable to growth.”<\/p>\n

The Monetary Policy Report is set to be released shortly after the rate decision.<\/p>\n

By Klavs Valters<\/strong>
\n\u00a0@klavsvalters<\/a><\/p>\n

Disclaimer: The articles are from GO Markets analysts, based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own; should not be taken as either representative of or shared by GO Markets. Advice (if any), are of a \u2018general\u2019 nature and not based on your personal objectives, financial situation or needs. You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice. If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.<\/em><\/p>\n

\"\"<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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