14 Jul 2014
BoC could signal delays to 2015 policy tightening on Wednesday - ING
FXStreet (Łódź) - According to James Knightley from ING, the disappointing Canadian employment data released last Friday could push the BoC to hint at potential delays to 2015 policy tightening in the Monetary Policy Report due out on Wednesday.
Key quotes
"The latest labour report from Canada was pretty disappointing, with the economy losing 9,400 jobs in June, which meant that annual jobs growth sank to its lowest rate since February 2010."
"In turn we saw unemployment take a small step up from 7.0% to 7.1%, showing that significant slack still remains in the economy while adding to worries about the prognosis for consumer demand."
"With regard to the Bank of Canada, the evident spare capacity gives it plenty of room to keep monetary policy loose as the BoC insist that inflation is not a threat despite headline inflation reaching their target (largely a temporary transport price related issue)."
"This slack reinforces the consensus view that any rise in rates will not happen before 3Q15, but given the general soft tone to Canadian figures even this may be a little early."
"Indeed, consensus on GDP growth lies below the Bank of Canada’s 2.5% 2014 prediction. This may bring cuts to the official growth forecast, which would maintain the downward pressure on the Canadian dollar."
Key quotes
"The latest labour report from Canada was pretty disappointing, with the economy losing 9,400 jobs in June, which meant that annual jobs growth sank to its lowest rate since February 2010."
"In turn we saw unemployment take a small step up from 7.0% to 7.1%, showing that significant slack still remains in the economy while adding to worries about the prognosis for consumer demand."
"With regard to the Bank of Canada, the evident spare capacity gives it plenty of room to keep monetary policy loose as the BoC insist that inflation is not a threat despite headline inflation reaching their target (largely a temporary transport price related issue)."
"This slack reinforces the consensus view that any rise in rates will not happen before 3Q15, but given the general soft tone to Canadian figures even this may be a little early."
"Indeed, consensus on GDP growth lies below the Bank of Canada’s 2.5% 2014 prediction. This may bring cuts to the official growth forecast, which would maintain the downward pressure on the Canadian dollar."