Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Bank of Canada says strong U.S. dollar could mean higher rates

Economy Oct 14, 2022 05:05PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in Ottawa, Ontario, Canada June 22, 2020. REUTERS/Blair Gable/File Photo

By Julie Gordon and Steve Scherer

OTTAWA (Reuters) -A persistently strong U.S. dollar, which makes imports and travel more expensive for Canadians, could mean the Bank of Canada will have "more work to do" on interest rates, Governor Tiff Macklem said on Friday, indicating further increases.

Macklem, speaking after International Monetary Fund and World Bank meetings in Washington, also said there was broad consensus at the annual gathering that hot inflation remains the most immediate threat to current and future prosperity.

"In the last six weeks, two months or so, we've seen a further leg up in the U.S. dollar. The Canadian dollar has not kept up," Macklem told reporters.

"Certainly if it persists ... that will mean that, other things equal, we're going to have more work to do on interest rates. We'll be watching that closely," Macklem said.

The Canadian dollar has tumbled 8.5% versus the U.S. dollar since August as aggressive interest rate hikes by the Federal Reserve and financial market volatility triggered gains for the safe-haven greenback.

Macklem also reiterated that interest rates would need to go higher still and said how high, and for how long, would depend on both the domestic and international pressures driving rapid price gains, along with longer term inflation expectations.

The Bank of Canada has raised its policy rate by 300 basis points since March, one of its steepest and fastest tightening cycles ever. Money markets are leaning toward a 50-bp increase on Oct. 26, though bets on a larger 75-bp move have inched up.

Inflation edged down to 7.0% in August and analysts surveyed by Reuters expect another drop to 6.8% when the September data is published next week. At the same time, underlying price pressures have proven sticky.

Macklem said the central bank will be watching the data closely, but said that even if inflation edges down further it would still remain far above the 2% target.

"What's not going to change in two weeks is the economy is still going to be clearly in excess demand, we're still going to have a very tight labor market and inflation. I'd love to see some good developments but it's still going to be too high," Macklem said.

Bank of Canada says strong U.S. dollar could mean higher rates
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Alan Rice
Alan Rice Oct 14, 2022 9:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"....higher rates." -(or higher inflation).
Den Bull
Den Bull Oct 14, 2022 5:41PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Invest with strength and effective strategies and be a successful investor. I've Trusted the process and opportunity of trading not only giving up but over trying being the key . I got good recommendations about a mamumitting woman who helped me in winning my success and managed my trading intelligently Using the RIO (RETURN OF INVESTMENT) for the sake of making Profit and not loss. Trade with a winning platform acquiring Trading strategies from a reputable manager "_CHLOE.HITCHMAN_" on 🅸🅽🆂🆃🅰🅶🆁🅰🅼 And +1(707)203-2460 on 🆆🅷🅰🆃🆂🅰🅿🅿 She welcome all form of investments specifically stocks and all forms of crypto currencies investment
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email