The Central Bank of Canada (BOC) policy meeting was the focus of investors today with widespread expectations that policymakers would decide to raise interest rates by 25 basis points.
The move will be the first increase in interest rates since 2018, thus opening the door to a ‘cycle’ of tightening by the central bank in fighting inflation.
Russia's attack on Ukraine is seen as not going to be a problem for the BOC as the continued surge in commodity prices could affect the recovery of the Canadian economy and the global economy at large.
The BOC, which has maintained its interest rate benchmark at its lowest level of 0.25% since March, has begun to lay its foundation in monetary policy setting.
Recounting Governor Tiff Macklem’s speech at a policy meeting last January, he warned that higher borrowing costs would occur in an economy at full capacity and no longer need a major stimulus.
The central bank has also sought to reassure Canadians that despite the relatively optimistic inflation outlook, policymakers are prepared to adjust quickly if price pressures prove to be worse than expected.
In the European session, the loonie dollar traded 0.2% higher against the USD with support from crude oil prices that soared to their latest annual highs.
