The International Monetary Fund believes Canada has some wiggle room to keep benchmark rates unchanged until early 2015, putting pressure on the loonie and Canadian dollar exchange traded fund.
The CurrencyShares Canadian Dollar Trust (NYSEArca: FXC) dipped 0.6% Wednesday. FXC is down 5.6% year-to-date.
The IMF expects Canada’s inflation level to hit the Bank of Canada’s 2% target by the end of 2015 and GDP to expand 2.25% in 2014 from 1.6% this year, reports Ari Altstedter for Bloomberg.
Canada’s inflation was at an annual 0.7% in October, below the central bank’s target.
“We think there’s room for monetary policy to remain as accommodative as it is for the next few months, especially given that inflation is so low.” Roberto Cardarelli, the IMF’s mission chief to Canada, said in the article. “We think the Bank of Canada has room to wait and see, to remain on the sidelines for a little while.”
The Canadian economy is also moving slower-than-expected, with the Bank of Canada Governor Stephen Poloz pointing to delays in export and business investment.