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12 Mar 2015
Would not necessarily emulate Fed rate hike – Bank of Canada
FXStreet (Mumbai) - The Bank of Canada’s (BOC) economists said on Thursday that the central bank would not necessarily raise the interest rates even if the Federal Reserve does raise rates.
Economist Rhys Mendes told the House of Commons finance committee that the Bank of Canada would weigh view a rate hike Fed as a sign of economic strength in the US, which would be positive for Canada. However, he stated that the central bank would not be under pressure to raise rates even if the Fed does so. Mendes said, “Not necessarily. The bank targets inflation in Canada and decisions regarding monetary policy in Canada would be based on the outlook for inflation."
He added further that in the absence of monetary policy stimulus amid falling Crude prices, the overall Canadian output would have been about 1.4% lower by the end of 2016. The BOC had shocked markets by cutting rates in January in order to negate the impact of falling oil prices.
Economist Rhys Mendes told the House of Commons finance committee that the Bank of Canada would weigh view a rate hike Fed as a sign of economic strength in the US, which would be positive for Canada. However, he stated that the central bank would not be under pressure to raise rates even if the Fed does so. Mendes said, “Not necessarily. The bank targets inflation in Canada and decisions regarding monetary policy in Canada would be based on the outlook for inflation."
He added further that in the absence of monetary policy stimulus amid falling Crude prices, the overall Canadian output would have been about 1.4% lower by the end of 2016. The BOC had shocked markets by cutting rates in January in order to negate the impact of falling oil prices.