●In the previous meeting, Canada’s central bank kept
its key interest rate at 5%.
●The current interest rate is unsustainable for
Canadians, and it seems evident that the Bank of Canada will keep the overnight
key rate.
●The BoC decision on the interest rate is likely to
weaken the national currency—the nearest target for USDCAD is 1.3650–1.3700.
The
Bank of Canada (BoC) is set to release its final interest rate report on 6
December, marking the eighth interest rate announcement this year. The rate is
expected to remain at the current level.
In
the previous October
meeting, Canada’s central bank kept
its key interest rate at 5%. It was the third consecutive rate hold of the
year. In Canada, there is growing evidence that past interest rate hikes have
dampened economic activity and eased price pressures. Consumption has declined,
with lower demand for housing, durable goods, and many services. Lower demand
and higher borrowing costs are putting pressure on business investment.
‘The current interest rate is unsustainable for Canadians, and it seems
obvious that the Bank of Canada will keep the overnight key rate,’ said Kar
Yong Ang, Octa’s financial market analyst. ‘The expectation of a pause and a
possible potential rate cut is causing the currency to weaken,’ he added.
The
bank’s preferred measures of core inflation show downward momentum, with CPI
inflation falling to 4.0% in August, 3.8% in September and 3.1% in October.
Higher interest rates are moderating inflation in many goods that people buy on
credit, and this is spreading to services. Considering the more apparent signs
of easing price pressure, it is likely that the Governing Council will hold the
policy rate at 5%. Such a decision will weaken the national currency: the
near-term target for USDCAD is 1.3650–1.3700.
About Octa
Octa is an international broker that has been providing
online trading services worldwide since 2011. It offers commission-free access
to financial markets and various services already utilised by clients from 180
countries with more than 42 million trading accounts. Free educational
webinars, articles, and analytical tools they provide help clients reach their
investment goals.
The company is involved in a comprehensive network of
charitable and humanitarian initiatives, including the improvement of
educational infrastructure and short-notice relief projects supporting local
communities.
Octa has also won over 60 awards since its foundation,
including the ‘Best Educational Broker 2023’ award from Global Forex Awards and
the ‘Best Global Broker Asia 2022’ award from International Business Magazine.