The Bank of Canada (BOC) kept its interest rates and the pace of its bond-buying steady in December. The financial institution noted that “considerable” economic slack could weigh down prices “for the foreseeable future”.
Recent lockdowns in Quebec and Ontario are expected to balance out vaccine optimism, so most traders don’t see the BOC making policy changes this week.
Governor Macklem’s references of a “lower floor,” however, have inspired some traders to expect a “micro cut” of 0.10% to 0.15%. Conflicting opinions could bring a volatile trading session for Loonie traders.
Annual prices rose by 1.0% in November, the fastest since February, while core price increase also speeded up from 1.0% to 1.5%.
Monthly consumer price increase slowed down from 0.4% to 0.1% though core prices. A lack of fresh action from the U.S. FOMC boosted the dollar and weighed on CAD despite the strong price increases.
Analysts see monthly and annual inflation maintaining their 0.1% and 1.0% growth rates respectively. Core inflation rate could dip slightly to 1.4%.