The Bank of Canada has indicated that it needs a more flexible, data-dependent monetary policy in the times to come, according to remarks yesterday from the bank’s head; Steven Poloz. Poloz stressed that they wouldn’t be thinking about interest rates mechanically, but rather that their outlook will depend on a number of statistical economic factors such as inflation, wage growth, business investment, consumer spending and debt, and so on. The Bank of Canada has hiked interest rates twice this year; once on the 12th of July when rates went up from 0.50% to 0.75%, and again on the 6th of September when they went up to 1.00%.
It’s important to note that the head of the Canadian regulator expects economic growth to slow down in the second half of the year compared to the first (Canada’s GDP growth in the second quarter reached 4.5% year on year), so there’s no guarantee of another rate hike from the BoC in the near future. Experts from the Canadian commercial bank Scotiabank expect one more rate hike this year followed by another two in 2018.
Yesterday, the Reserve Bank of New Zealand’s meeting on monetary policy concluded with the bank’s official cash rate being maintained at its current level of 1.75%; as was expected. An official statement from the regulator said that economic growth in the country would remain stable in the near future thanks to a loose monetary policy, increased migration to the country, increased exports, and fiscal stimulus measures passed in 2017. Still, the RBNZ continues to believe that the Kiwi dollar is overvalued.
Day’s news (GMT+3):
- 09:00 Germany: Gfk consumer confidence survey (Oct).
- 09:35 Japan: BoJ governor Kuroda’s speech.
- 15:30 USA: goods trade balance (Aug).
- 16:30 USA: GDP annualised (Q2).
- 17:15 USA: Fed’s Stanley Fischer speech.
Finalised GDP figures for the US in the second quarter of 2017 are due to be published today. As far as I can see, this data has already been factored in by the market and won’t be a trend-setter for the dollar. In the short term, however, its publication could create some volatility on currency markets.
